India Residency Rules for NRIs: Resident, Non-Resident and RNOR Tests

Your status under India residency rules decides what India can tax. A non-resident Indian (NRI) is taxed in India only on Indian income. A resident and ordinarily resident is taxed on worldwide income. In between is the resident but not ordinarily resident (RNOR), a status that protects most foreign income for several years. The tests are day-count based, they are applied separately every year, and there is a separate FEMA definition that governs your bank accounts and investments. This page sets out the tests for FY 2025-26 under the Income-tax Act, 1961 and tax year 2026-27 under the Income-tax Act, 2025, which CBDT says are the same in substance.

How do India residency rules decide resident or non-resident?

Section 6 of the Income-tax Act, 2025 follows the same structure as section 6 of the 1961 Act. For a tax year, an individual is resident if either test applies:

1. The person is in India for a total of 182 days or more in that year; or
2. The person is in India for 60 days or more in that year and has been in India for 365 days or more in the four years before it.

Three adjustments apply to the second test:

• Leaving for work abroad. An Indian citizen who leaves India in the year as a ship crew member or for employment outside India is a resident only on the 182-day test; the 60-day test does not apply (section 6(3)).
• Visiting citizens and persons of Indian origin. A citizen of India or a person of Indian origin who is outside India and visits in the year also uses 182 days, not 60 (section 6(4)).
• The ₹15 lakh trigger. If that visitor's total income, other than income from foreign sources, exceeds ₹15 lakh, the 60-day figure becomes 120 days (section 6(5)).

A "person of Indian origin" in the 2025 Act is an individual who, or whose parent or grandparent, was born in undivided India. "Income from foreign sources" means income that accrues or arises outside India, other than income from a business controlled in India or a profession set up in India.

What is deemed residence?

Section 6(7) deems an individual to be resident if the person is an Indian citizen, is not liable to tax in any other country because of domicile, residence or similar criteria, and has total income over ₹15 lakh (excluding foreign-source income). It does not apply to someone already resident under the day tests. A deemed resident is always treated as RNOR. The rule targets Indian citizens living in countries with no income tax, such as some Gulf states. A person living in Aurora, Illinois, who is taxed in the United States will normally not be caught.

When is a resident also RNOR?

A resident is "not ordinarily resident" under section 6(13) if any of these applies:

• The person was non-resident in nine of the ten preceding tax years.
• The person was in India for 729 days or less in the seven preceding tax years.
• The person is a citizen of India or person of Indian origin with total income (excluding foreign sources) over ₹15 lakh who was in India for 120 days or more but fewer than 182 days.
• The person is a citizen deemed resident under section 6(7).

CBDT's interplay FAQs state that none of these tests changed in the new Act, and that the look-back tests still reach tax years under the old law.

What does each status mean for tax?

Residents other than RNOR must also report foreign assets and signing authority in the return. See Schedule FA and the Black Money Act.

How does the 2026 transition affect residency?

Residential status is decided separately each year. For FY 2025-26 you apply section 6 of the 1961 Act (sections 6(1), 6(1A) and 6(6)). For FY 2026-27 you apply section 6 of the 2025 Act (6(2), 6(7) and 6(13)). A stay that spans March and April is split at March 31. The look-back counts, such as 365 days in the four preceding years or nine of the ten preceding years, include years that fell under the old Act. The change is covered in Income-tax Act 2025 transition.

How is FEMA residence different?

The Reserve Bank of India uses a separate definition for bank accounts, investments and property. Under FEMA a "person resident in India" is one who stayed more than 182 days in the preceding financial year, but not one who left or stays abroad for employment, business or any purpose indicating an intention to stay outside India for an uncertain period. RBI's property master direction adds that purpose of stay and the type of visa matter, not only the day count.

The tests can give different answers. Someone back in Hyderabad for 190 days to care for a parent, with a U.S. job still waiting, may be a resident for income tax and still a non-resident for FEMA because there is no intention to settle. The NRE account interest exemption in Schedule IV of the 2025 Act depends on FEMA status, not tax status, a point CBDT confirms. For account types see NRE, NRO and FCNR accounts.

Worked examples

Returning professional. Anil spent eight years in Aurora and visited India about 60 days a year. He moves to Bengaluru on June 1, 2026 and is in India 304 days in FY 2026-27, so he is resident. In the seven preceding years he was in India about 420 days, which is 729 or fewer, so he is RNOR. His U.S. brokerage dividends and interest for this year are generally outside Indian tax, while his Indian salary is taxable. As the day counts roll forward, he is likely to lose RNOR status after a couple of years, and his CA reruns the count each year.

Visiting green card holder. Sunita, an Indian citizen living in Naperville, spends 140 days in India in FY 2026-27 and has ₹22 lakh of Indian rent and gains. Because her Indian income exceeds ₹15 lakh, the 120-day figure applies. She has been in India 400 days in the four preceding years, so she is resident, and because she was in India 120 to 181 days with income over ₹15 lakh she is RNOR. Her U.S. salary remains outside Indian tax.

Documents to keep

• Passport pages showing entry and exit stamps, and boarding passes
• Calendar of days in India by month, reviewed with your CA at the year end
• Employment contract or visa records that show the intention to stay abroad
• Records of Indian income to test the ₹15 lakh figure

Mistakes to avoid

• Counting only calendar-year days. The test follows the April to March year.
• Treating the 182-day figure as a safe harbour when Indian income exceeds ₹15 lakh and the stay is 120 days or more.
• Assuming your OCI card or citizenship settles the question. Neither decides tax residence.
• Updating an NRE account to resident status late, or failing to update it. See moving from the U.S. to India: tax checklist.

U.S. side

U.S. citizens, green card holders and anyone meeting the substantial presence test are U.S. tax residents even when also resident in India. Article 4 of the US-India treaty resolves dual residency through permanent home, centre of vital interests, habitual abode and nationality, but a U.S. citizen is still taxed by the United States. See U.S. tax residency tests, residency tests compared and the three-country tie-breaker.

How we can help

Our Illinois CPA firm, serving Aurora and the Fox Valley, builds a day-count record for the U.S. and Indian tests and prepares the U.S. side of a move. We do not decide Indian residency or file Indian returns; your Indian CA does that. See relocation and immigration tax planning and individual returns for NRIs. More guides sit on the India hub.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.