Published 19 October 2026
Residential status decides what India taxes. A resident is taxed on world income. A person who is “not ordinarily resident” (RNOR) is taxed broadly on Indian income only. A non-resident is taxed only on income received in India or arising here. The status is not a matter of citizenship, a visa or a bank account label. It is worked out afresh for every year, by counting days in India and applying a short list of statutory tests. Most mistakes come from counting the wrong year or applying the wrong exception.
Which Act applies
- Tax year 2026-27 onwards (from 1 April 2026): section 6 of the Income-tax Act, 2025, with the Income-tax Rules, 2026.
- AY 2026-27 (FY 2025-26) and earlier years: section 6 of the Income-tax Act, 1961. Under section 536(2)© of the 2025 Act, proceedings for any tax year beginning before 1 April 2026 continue under the 1961 Act.
The tests are the same in substance. The 2025 Act sets them out as separate numbered sub-sections, where the 1961 Act used clauses and Explanations:
| Test | 1961 Act, s.6 | 2025 Act, s.6 |
|---|---|---|
| 182 days | (1)(a) | (2)(a) |
| 60 days plus 365 days | (1)© | (2)(b) |
| Leaving India for employment or as crew of an Indian ship | Explanation 1(a) | (3) |
| Citizen or person of Indian origin on a visit | Explanation 1(b) | (4) |
| 120 days where Indian income exceeds Rs 15 lakh | Explanation 1(b) | (5) |
| Crew of a foreign-bound ship | Explanation 2 | (6), with rule 8 of the 2026 Rules |
| Deemed resident citizen | (1A) | (7) and (8) |
| Not ordinarily resident | (6) | (13) |
| “Income from foreign sources” | Explanation to (6) | (14) |
The two basic tests
Under section 6(2) of the 2025 Act, an individual is resident in a tax year if he:
- “(a) is in India for a total period of one hundred and eighty-two days or more in that tax year; or”
- “(b) is in India cumulatively for sixty days or more during that year and has been in India cumulatively for three hundred and sixty-five days or more in the four years preceding such tax year.”
Section 6(1)(a) and © of the 1961 Act are to the same effect. Meeting either test makes the individual resident. Failing both makes him non-resident, unless the deemed-residence rule below applies.
Where the 60-day test is switched off
The 60-day test in section 6(2)(b) catches people with long past stays who spend only two months in India. Three exceptions narrow it.
Leaving India. Section 6(3) disapplies clause (2)(b) for a citizen of India who leaves India in the tax year as a member of the crew of an Indian ship, or “for the purposes of employment outside India”. In the year of departure only the 182-day test counts. The 1961 Act reached the same result by substituting “one hundred and eighty-two days” for “sixty days”.
In CIT v. O. Abdul Razak (Kerala High Court, 13 December 2010, ITA No. 1489 of 2009), the assessee left India on 24 September 1988 to set up his own business abroad and was in India for 177 days that year. The Assessing Officer held that “employment” meant working for an employer and treated him as resident under the 60-day test. The High Court disagreed. Relying on the Finance Bill memorandum and CBDT Circular No. 346, it held that going abroad “for the purpose of employment” includes self-employment such as business or profession, and excludes only purposes such as tourism, study or medical treatment. The words are unchanged in section 6(3)(b) of the 2025 Act.
Visiting India. Section 6(4) disapplies clause (2)(b) for an individual who is “a citizen of India or a person of Indian origin” and who, “being outside India, comes on a visit to India”. Such a visitor is resident only on 182 days. Section 2(78) of the 2025 Act defines a person of Indian origin as an individual who, or either of whose parents or any of whose grandparents, was born in undivided India.
Whether a person who returns to India for good “comes on a visit” in the year of return is a question of fact on the statutory words. The exception is framed for visitors.
The 120-day rule. Section 6(5) cuts back the visitor’s exception. Where the visitor’s total income, “other than the income from foreign sources”, exceeds Rs 15 lakh in the tax year, clause (2)(b) applies with “one hundred and twenty days” in place of sixty. Such a visitor is resident if he is in India for 120 days or more in the year and 365 days or more in the four preceding years. The 1961 Act carries the same rule in Explanation 1(b), inserted by the Finance Act, 2020 with effect from AY 2021-22, together with the deemed-residence rule in section 6(1A).
“Income from foreign sources” is defined in section 6(14). It means income that accrues or arises outside India and is not deemed to accrue or arise in India, except income derived from a business controlled in or a profession set up in India. Indian rent, interest on Indian deposits and capital gains on Indian assets all count towards the Rs 15 lakh.
Seafarers. For a citizen who is a crew member of a foreign-bound ship, section 6(6) leaves the day count to the Rules. Rule 8 of the Income-tax Rules, 2026 excludes the period between the joining and signing-off dates entered in the Continuous Discharge Certificate for an “eligible voyage”, one between a port in India and a port outside India.
Deemed residence: the citizen who pays tax nowhere
Section 6(7) of the 2025 Act deems an individual resident, whatever his days, if he:
- “(a) is a citizen of India;”
- “(b) is not liable to tax in any other country or territory due to his domicile, residence, or similar criteria; and”
- “© has total income exceeding fifteen lakh rupees during such tax year (other than the income from foreign sources).”
Section 6(8) says the deeming does not apply to someone already resident under sub-sections (2) to (6). Section 6(1A) of the 1961 Act is the same rule. It is aimed at citizens who live in countries without income tax, or who move between countries without becoming tax resident in any. A person of Indian origin who is not a citizen is outside it. A deemed resident is always “not ordinarily resident” (section 6(13)©).
Not ordinarily resident: three routes
An individual who is resident under the tests above is “not ordinarily resident” if section 6(13) of the 2025 Act applies:
- (a) Long absence. He has been a non-resident in nine out of the ten preceding tax years, or has been in India for 729 days or less in total in the seven preceding tax years. The same test applies to a Hindu undivided family through its manager.
- (b) The 120-day visitor. A citizen or person of Indian origin whose Indian income exceeds Rs 15 lakh, and who is in India for 120 days or more but less than 182 days. Such a person becomes resident under section 6(5), but only as RNOR.
- © The deemed resident under section 6(7).
The consequence is in section 5(1)©. An RNOR’s income that accrues or arises outside India is included “only when it is derived from a business controlled in or a profession set up in India”. The proviso to section 5(1) of the 1961 Act is the same. Guide 1505 covers how RNOR years work for a person returning to India.
Status of other persons
- A Hindu undivided family, firm or other association of persons is resident unless the control and management of its affairs is situated wholly outside India during the year (section 6(9)).
- A company is resident if it is an Indian company or its place of effective management is in India in that year (section 6(10)).
- Every other person is resident unless control and management is wholly outside India (section 6(11)).
- Status is per person, not per source of income (section 6(12)).
Stay that was not by choice
In CIT v. Suresh Nanda (Delhi High Court, 27 May 2015, ITA 715/2014 and connected appeals), the assessee had been a non-resident since 1985. He came to India on 28 September 2006, and his passport was impounded on 10 October 2006 and returned only on 21 September 2011 under court orders. That put him in India for more than 182 days in FY 2006-07 and FY 2007-08. The Tribunal had found the impounding unjustified. The High Court excluded the period of involuntary stay and held him non-resident. It added a caveat: the decision is not a “thumb rule” that every involuntary stay is excluded. Each case turns on its own facts.
The tests themselves contain no exception for involuntary stay. The decision rests on the Court’s view of the provision’s purpose on unusual facts.
Treaty tie-breakers
Section 6 settles residence for Indian law only. A person resident in both India and another country under their domestic laws may rely on the tie-breaker article of the tax treaty. That article usually looks at the permanent home, then the centre of vital interests, then the habitual abode, then nationality. Treaty relief needs a tax residency certificate and other information. Guide 1503 covers that.
What to have ready
- Passport and travel records for the year and the preceding years needed by the tests: four years for section 6(2)(b), seven or ten years for section 6(13). Entry and exit stamps, boarding passes and immigration records are the evidence.
- A day count for each tax year (1 April to 31 March), not each calendar year.
- The purpose of each departure: an employment letter or business records where section 6(3)(b) is relied on.
- Indian-source income for the year, to test the Rs 15 lakh limit in sections 6(5), 6(7) and 6(13)(b).
- Evidence of liability to tax abroad, such as a foreign tax residency certificate or foreign returns, where section 6(7) is in question.
Where status is declared
Status is declared in the return. The portal’s ITR-2 user manual for AY 2026-27 asks the filer to select “Residential Status in India” and the “Conditions for Residential Status” from drop-down menus. The status chosen drives which schedules open. For example, the manual states that Schedule FA “need not be filled up” by a non-resident or RNOR. A wrong status can be corrected by a revised return within the time allowed. See Belated and Revised Returns.
Summary
- Identify the year and the Act: the 1961 Act up to AY 2026-27, the 2025 Act from tax year 2026-27.
- Count days in India for the tax year and for the four, seven and ten preceding years.
- Apply the 182-day test, then the 60/365-day test, unless section 6(3) or 6(4) switches the 60-day test off.
- For a visiting citizen or person of Indian origin with Indian income above Rs 15 lakh, replace 60 days with 120.
- For a citizen not liable to tax anywhere with Indian income above Rs 15 lakh, apply deemed residence under section 6(7).
- If resident, test for RNOR status under section 6(13).
- Declare the status in the return and keep the travel evidence.
The next guide, Paying a Non-Resident: Forms 15CA and 15CB, covers what an Indian payer must file before remitting money to a non-resident.