Residential Status under the Income-tax Act, 2025: Are You Resident, RNOR or NRI?

How much of your income India can tax depends on one thing: your residential status for the year. It decides whether India taxes only your Indian income or your income from anywhere in the world. People often get it wrong, especially NRIs who visit India often or who are planning to move back.

The Income-tax Act, 2025 applies from 1 April 2026, and residence is now covered by section 6 of the new Act. The good news is that the Income Tax Department has confirmed the basic tests have not changed. This guide explains them in plain language.

Which law applies? For income earned up to 31 March 2026 (FY 2025-26, the return filed in 2026), the Income-tax Act, 1961 still applies. For the tax year 2026-27 onwards, the Income-tax Act, 2025 applies. The 2025 Act also replaces the terms “previous year” and “assessment year” with a single “tax year”.

The three categories

Status	What India taxes
Resident and Ordinarily Resident (ROR)	Income from anywhere in the world
Resident but Not Ordinarily Resident (RNOR)	Indian income, plus foreign income only if it comes from a business controlled in India or a profession set up in India
Non-Resident (NRI)	Only income received, or earned, in India

Step 1: Are you a resident?

You are a resident for a tax year if you meet either of these tests:

The 182-day test: you are in India for 182 days or more in the tax year, or
The 60 + 365 test: you are in India for 60 days or more in the tax year and for 365 days or more in total over the four tax years before it.

If you meet neither test, you are a non-resident.

Exceptions where 60 days becomes 182 or 120 days

The 60-day test is relaxed for:

Indian citizens leaving India for employment abroad (or as crew of an Indian ship) in that year. For them, only the 182-day test applies.
Indian citizens and Persons of Indian Origin (PIO) who live abroad and visit India:
- If their Indian income (income other than from foreign sources) is ₹15 lakh or less, only the 182-day test applies.
- If their Indian income is more than ₹15 lakh, the 60 days becomes 120 days (still with 365 days over the previous four years). Someone who becomes resident only because of this 120-day rule is treated as RNOR.

Step 2: Deemed residency (the “stateless” rule)

An Indian citizen is treated as resident in India, however few days they spend here, if:

their Indian income is more than ₹15 lakh, and
they are not liable to tax in any other country because of where they live or are domiciled.

A deemed resident is always treated as RNOR. When this rule was introduced in 2020, the CBDT said it does not intend to tax genuine workers abroad (for example in the Gulf) on what they earn outside India. Their foreign income is taxed only if it comes from an Indian business or profession. There is a separate article on this rule in this series.

Step 3: If you are resident, are you ordinarily resident?

A resident individual is RNOR if either condition is true:

they were a non-resident in 9 of the 10 tax years before this one, or
they were in India for 729 days or less in total over the 7 tax years before this one.

If neither applies, they are ROR. RNOR status is very useful for NRIs moving back to India, because for the first two or three years their foreign income generally stays outside Indian tax.

Worked examples

Example 1: NRI on a long visit. Rohan works in Dubai and visited India for 75 days this year and about 300 days over the previous four years. He fails both tests (75 < 182, and 300 < 365), so he is a Non-Resident.

Example 2: Indian citizen with high Indian income. Meera lives in London. Her Indian rental and interest income is ₹18 lakh. She spent 130 days in India this year and 400 days over the previous four years. Because her Indian income is above ₹15 lakh, the 120-day test applies. She meets it (130 ≥ 120 and 400 ≥ 365), so she is resident, but RNOR.

Example 3: Returning NRI. Arjun moved back to India this year after 12 years abroad and stayed 250 days. He is resident (250 ≥ 182). He was non-resident in 9 of the last 10 years, so he is RNOR. His US salary from before he returned and his foreign investment income are generally not taxable in India this year.

How to count days in India

Any part of a day in India usually counts as a day. Courts have generally counted both the arrival and departure dates. Keep your passport stamps and travel records.
For seafarers working on ships, specific rules decide which days on a voyage count as days in India. These come from the Income-tax Rules.
Your citizenship or OCI card does not decide your tax status. Only the number of days and the income tests do.

Common mistakes

Assuming you are an NRI because you hold a foreign visa or work permit.
Forgetting that the ₹15 lakh Indian income limit changes the test from 60 days to 120 days.
Not telling your bank you are now non-resident. Savings accounts must be converted to NRO, as FEMA requires.
Returning NRIs filing as ROR straight away and paying tax on foreign income that was not taxable.

Frequently asked questions

Has residential status changed under the new Income-tax Act, 2025?
The tests have not changed. The Income Tax Department’s NRI FAQs confirm the 182-day and 60 + 365-day tests, deemed residency and the RNOR conditions all continue. Only the section numbers and the “tax year” wording have changed.

I am an NRI. Do I need to be outside India for 182 days?
No. You are resident only if you are in India for 182 days or more, or you meet the 60/120-day test. You become non-resident by failing those tests, not by being abroad for any set number of days.

Does OCI or a foreign passport make me non-resident?
No. Residential status for tax depends only on days in India and your income, not on citizenship.

Does residential status under FEMA and under income tax match?
Not always. FEMA uses different tests, based on your purpose and intention, for your bank accounts and investments. You should check your status under both laws separately.

Not sure of your status this year? Garvita Jain & Co. works out residential status for NRIs and returning Indians, and files the right return. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.

This article is general information based on the law as of October 2026 and is not professional advice. Please check the facts of your case with a Chartered Accountant.

Sources

Official

Professional / CA publications