the term “non-resident” is not about citizenship. it is about days spent in india.
under indian tax law, an individual is classified as a non-resident if they do not meet the conditions for being a “resident” in a given financial year . the rules changed from april 1, 2026. the new income tax act, 2025 introduced modifications to the residential status determination .
this distinction matters because it decides what income is taxable in india and what is not .
how residency is determined under the new act
under section 6 of the income tax act, 2025, an individual is considered a resident in india if they satisfy either of two conditions .
condition 1. presence in india for 182 days or more in the tax year.
condition 2. presence in india for 60 days or more in the tax year, and 365 days or more in the four preceding years .
if neither condition is met, the individual is a non-resident .
exceptions to condition 2
the 60-day condition does not apply to certain categories :
indian citizens leaving for employment. individuals who leave india for employment or as crew on an indian ship are exempt from the 60-day test .
indian citizens and persons of indian origin visiting india. the 60-day threshold is extended to 182 days. however, for those with total income exceeding ₹15 lakh (excluding foreign income), the threshold is reduced to 120 days .
this 120-day rule applies to high-income visitors who earn more than ₹15 lakh in india .
deemed residency
under section 6(7) of the new act, an indian citizen may be deemed a resident if :
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not liable to tax in any other country due to residence or domicile
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total income from indian sources exceeds ₹15 lakh
this rule targets individuals living in zero-tax jurisdictions like the uae, bahrain, and qatar . such individuals are generally classified as resident but not ordinarily resident (rnor), meaning only their indian income is taxable .
resident but not ordinarily resident (rnor)
rnor is a transitional category. an individual qualifies as rnor if they have been a non-resident in nine out of ten preceding tax years, or have stayed in india for 729 days or less in the seven preceding tax years .
for nris returning to india, rnor status typically lasts two to three years . during this period, foreign income is generally not taxable in india .
scope of taxable income
residential status determines what income is taxed :
| status | scope of taxation |
|---|---|
| resident and ordinarily resident (ror) | global income |
| resident but not ordinarily resident (rnor) | india-sourced income only |
| non-resident (nr) | india-sourced income only |
foreign income earned and received abroad is not taxable for nris .
nri taxation on indian income
income earned in india is taxable for nris :
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salary for services rendered in india
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rent from property in india
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capital gains from indian assets
non-residents are taxed at the same progressive slab rates as residents. but they cannot claim the rebate under section 87a .
tds for non-residents
tds rates for nris are higher. on rent, property sales, or other income, the buyer must deduct tds at applicable rates. a refund can be claimed by filing an itr .
income tax act, 2025: what changed
the new act retained the core residency tests but introduced enhanced reporting requirements . the 120-day rule for high-income visitors was carried forward. hra exemption now requires disclosure of the landlord-tenant relationship .
frequently asked questions
1. who is a non-resident individual under indian tax law ?
an individual who does not meet the residency conditions under section 6 of the income tax act. generally, someone who stays less than 182 days in india in a financial year .
2. does the 120-day rule apply to all nris ?
no. it applies only to indian citizens or persons of indian origin with total indian income exceeding ₹15 lakh, excluding foreign income .
3. what is deemed residency ?
indian citizens not liable to tax in any other country and earning over ₹15 lakh in india may be deemed resident .
4. is foreign salary taxable for an nri ?
no. nris are taxed only on india-sourced income . foreign salary is generally not taxable.
5. what is the benefit of rnor status ?
foreign income is not taxable in india during the rnor period . this provides a transition window for returning nris.
