Start with the correct year and separate residence from the tax result
Determine individual residence separately for each 1 April to 31 March period. Use Sections 5 and 6 of the Income-tax Act, 1961 through FY 2025–26 (AY 2026–27). For tax year 2026–27 onward use Sections 5 and 6 of the Income-tax Act, 2025. The main day thresholds and categories continue under the new Act, but the subsection numbers change. Earlier days and residence years remain relevant to the statutory lookbacks. A treaty residence tie-breaker and the treaty’s income provisions can affect the result where both countries treat the person as resident.
Step 1: Check the physical presence tests
| Test | Current year | Lookback |
|---|---|---|
| General 182-day test | At least 182 days in India | None for this test |
| Alternative test | At least 60 days in India, subject to exceptions below | At least 365 days in India in the four preceding years |
| Indian citizen leaving for overseas employment or as a qualifying crew member of an Indian ship | The alternative current-year threshold becomes 182 days | The general 182-day test remains independently available |
| Indian citizen or qualifying person of Indian origin (PIO), outside India, coming on a visit; total income other than income from foreign sources of ₹15 lakh or less | The alternative current-year threshold becomes 182 days | The general 182-day test remains independently available |
| Such visitor with total income other than income from foreign sources above ₹15 lakh | The alternative current-year threshold becomes 120 days | At least 365 days in India in the preceding four years; the general 182-day test also remains available |
These are Section 6(1) and Explanation 1 under the 1961 Act, and Section 6(2)–(5) under the 2025 Act. The high-income visitor change first applies for FY 2020–21 (AY 2021–22). A 120–181 day visitor with the required prior presence who becomes resident under this special test is RNOR. At 182 days or more, a person is resident but may still qualify as RNOR under the separate historical tests. Below 120 days, test deemed residency separately if the person is an Indian citizen.
Calculate the ₹15 lakh threshold using total income other than income from foreign sources. For this purpose, income accruing or arising outside India is foreign-source income only if it is not deemed to accrue or arise in India and is not derived from a business controlled in India or a profession set up in India. Source, first receipt, and the status of a visit or departure must be checked on the facts.
Day counts and eligible voyages
Build a dated itinerary from immigration records, passports, boarding records and, where relevant, seafarer documents. The examples below use both arrival and departure dates as a conservative calendar-day count and count a given calendar day only once. This is a stated convention for the examples. If a partial day would change the answer, check the applicable authority on the specific facts and preserve arrival and departure times; do not assume a universal statutory rounding rule.
Under the 1961 Act, the overseas-employment or Indian-ship exception is separate from the calculation of stay for Indian citizen crew of a foreign-bound ship under Explanation 2 to Section 6(1) and Rule 126. For an eligible voyage carrying passengers or freight in international traffic, Rule 126 excludes the qualifying Continuous Discharge Certificate (CDC) period from the date of joining through signing off. The voyage must be between an Indian port and a port outside India in either direction, as specified. Under the 2025 Act check Section 6(6) and Rule 8 of the 2026 rules.
Step 2: Consider deemed residence
Section 6(1A) of the 1961 Act and Section 6(7) of the 2025 Act apply to an Indian citizen who is not otherwise resident under the applicable rules, whose total income other than income from foreign sources exceeds ₹15 lakh, and who is not liable to tax in any other country or territory by reason of domicile, residence or similar criteria. A person caught by this rule is RNOR. Zero tax actually paid, a visa, a low headline rate or citizenship alone does not establish the statutory test. “Liable to tax” includes a person who is subsequently exempted from an income-tax liability under the foreign law.
Step 3: Distinguish RNOR from ordinarily resident
An individual who is resident is RNOR if they were non-resident in at least nine of the ten preceding years or were in India for 729 days or less over the seven preceding years. An eligible high-income 120–181 day visitor who becomes resident and a citizen deemed resident are also RNOR. See Section 6(6)(a), (c) and (d) of the 1961 Act or Section 6(13) of the 2025 Act. Recalculate the lookbacks each year; there is no fixed two-year holiday.
Step 4: Determine which income and assets to report
| Item | Ordinarily resident (ROR) | RNOR | Non-resident (NR) |
|---|---|---|---|
| Income received or deemed received in India, or accruing, arising or deemed to accrue or arise in India | In scope | In scope | In scope |
| Income accruing abroad from a business controlled in India or a profession set up in India, first received abroad and not otherwise in the Indian tax base | In scope | In scope | Outside the ordinary Section 5 scope on these facts |
| Other income accruing and first received abroad, with no deemed Indian source or receipt | Generally in scope | Generally outside scope | Generally outside scope |
| Schedule FA under applicable older ITR forms | Complete if the foreign asset, interest or income reporting criteria apply | Not required under the form instructions | Not required under the form instructions |
First receipt in India differs from remitting funds already received abroad. Work done in India, even for a foreign employer, can have an Indian source. Check reporting and relief separately; exemption, treaty treatment, foreign tax credit and Schedule FA are different questions. For a new-law year use the instructions to the form applicable to that year.
Five worked illustrations
1. Dubai resident visiting India for 142 days
In FY 2023–24 Tariq, an Indian citizen living in Dubai, visits India for 142 days and spent 410 days in India during the preceding four years. Assume the Mumbai shops are taxed as house property, the annual value after any qualifying municipal taxes is ₹18.50 lakh, and there is no other house-property adjustment. Section 24(a) gives a 30% deduction of ₹5.55 lakh, leaving ₹12.95 lakh. With ₹6.50 lakh taxable NRO interest and debenture income, the relevant total is ₹19.45 lakh, above ₹15 lakh.
He meets the 120-day and 365-day conditions, so is RNOR. Assume the Dubai salary and consulting income of AED 800,000 (₹1.80 crore at an assumed ₹22.50 per AED) accrues and is first received abroad, is not deemed to arise in India and is not from an India-controlled business or India-set-up profession. On those assumptions it is outside his Indian tax base. Schedule FA is not required for RNOR on the applicable older form.
2. Leaving India for employment in London
Ananya, an Indian citizen, leaves India on 24 September 2023 to take up employment in London and does not return during the year. Counting both endpoints, 1 April–24 September is 177 days. If she was in India for every day of the four preceding financial years, the total was 1,461 days, including 29 February 2020. Nevertheless, the employment exception substitutes 182 days for the alternative current-year test, so the prior days do not make her resident. A departure on 28 September would mean 181 days under the same convention. Assume no deemed residency applies; for example, document foreign residence-based tax liability or that the relevant threshold is not crossed.
For her October–March UK salary of GBP 50,000 (₹52.50 lakh at an assumed ₹105 per GBP), assume the work is performed and the salary first received abroad, with no deeming rule applicable. The foreign salary is outside the Indian tax base on those facts; the Indian salary remains within it.
3. Deemed residence without 60 days in India
Sameer, an Indian citizen, spends 45 days in India, 180 in Dubai, 140 elsewhere in Europe and one further day abroad in transit in FY 2023–24 (366 days). He has ₹45 lakh of total income other than income from foreign sources. Assume a documented analysis establishes he is not liable to income tax elsewhere by residence, domicile or similar criteria. He fails the ordinary physical presence test and is deemed resident, hence RNOR. His ₹6.50 crore foreign trading profits are outside the scope on the assumptions that the income accrues and is first received abroad, is not deemed to arise in India and the business is controlled outside India. A zero personal tax bill alone would not support this conclusion.
4. Return after an overseas career
Dr Alok was non-resident for 18 financial years, FY 2005–06 through FY 2022–23. He returns on 1 July 2023, stays in India thereafter and had 100 total India-visit days in the five years FY 2018–19 through 2022–23. Assume these residence classifications are established. His foreign holdings include a US retirement account, dividend-paying stock and a USD 45,000 annual private pension.
| Year | Days in India in current year | Non-resident years out of prior 10 | Result |
|---|---|---|---|
| FY 2023–24 | 275 | 10 | RNOR under the historical residence test |
| FY 2024–25 | 365 | 9 | RNOR under the historical residence test |
| FY 2025–26 | 365 | 8 | ROR: the previous seven years total 740 days (100 + 275 + 365), also above 729 |
During RNOR years, foreign pension or investment income first received and accruing abroad may be outside the domestic scope if no Indian nexus rule applies. In the ROR year assess worldwide income and complete applicable foreign schedules. Examine the India–US treaty pension article, the nature of the payments (including any government or social security benefit), and the Section 89A/Rule 21AAA election for a qualifying retirement account; the account balance itself is not annual taxable income. With only 89 earlier visit days, the seven-year total would instead be 729, preserving RNOR for the third year on that test.
5. Merchant navy captain’s CDC count
Captain Varma is an Indian citizen leaving as crew of an Indian ship on an eligible international freight voyage from India to Singapore. Assume the CDC records joining on 20 April 2023 and signing off on 15 December 2023 for the qualifying voyage; those endpoints span 240 days inclusive. With 366 days in the financial year and all other days spent in India, the count is 126 days. The crew exception substitutes 182 days for the alternative current-year test. If deemed residency does not apply, he is NR. The ₹48 lakh salary still requires a separate source and receipt analysis; residence and a CDC alone do not exclude the whole salary. For services outside India, check the relevant CBDT guidance if credited to an Indian NRE account.
Frequently asked questions
1. Does an OCI card establish the visitor exception?
Check the tax-law definition of PIO and whether the stay is a visit by someone who was outside India. Under Section 115C of the 1961 Act the birth test can be met by the individual, a parent or a grandparent born in undivided India. The card is not a substitute for the statutory conditions.
2. Does a UAE Golden Visa prevent deemed residence?
No automatic result follows. Determine foreign income-tax liability by domicile, residence or similar criteria and apply the income threshold and other conditions.
3. Does RNOR status require Schedule FA?
The relevant older return instructions say RNOR and NR do not complete Schedule FA. Taxable foreign income and other reporting requirements must still be checked separately.
4. What if I land at 11:45 p.m. on 31 March?
Record the actual date and time and include 31 March in a conservative presence count. If one disputed day changes the result, verify the legally appropriate count for those facts.
5. Can an NRI give money to a resident parent, spouse or child?
A genuine gift to a qualifying relative is within the relative exception in Section 56(2)(x) of the 1961 Act and the corresponding rule under the 2025 Act. This exception turns on the relationship, not the NRE origin of the funds. Keep the gift and relationship records and check applicable banking rules separately.
6. Does the visa determine whether I left for overseas employment?
No. The purpose of departure and the evidence matter. Keep contracts or other records of substantive overseas work and the relocation. A short business or tourist visit is not itself proof of leaving for overseas employment.
Sources
- Income-tax Act, 1961: Sections 2(29A), 5, 6, 9, 24, 56, 89A and 115C
- Income-tax Act, 2025, as amended: Sections 5 and 6
- Income Tax Department FAQs: residence across the 1 April 2026 transition
- Notification 70/2015: Rule 126 and qualifying voyages
- Notified Income-tax Rules, 2026: Rule 8 for eligible voyages
- Notification 47/2026: AY 2026–27 return forms and residential status
- Income Tax Department ITR-2 user manual: Schedule FA
- India–US convention: pension and double-taxation relief articles
- Notification 24/2022: Rule 21AAA and Form 10-EE
- CBDT Circular 13/2017: non-resident seafarer salary
- CBDT tax bulletin: Circular 17/2017 extending the clarification to Indian and foreign ships