Am I an NRI This Year? Section 6 Residential Status and the 182-Day Rule Explained

Whether you are an NRI in a given year is not a matter of your passport, your visa or where your salary lands. It is decided arithmetically, by counting the days you spent physically in India during the previous year (1 April 2025 to 31 March 2026 for assessment year 2026-27). Section 6 of the Income Tax Act 1961 sets out that count, and getting it wrong by even a day can flip your global income into the Indian tax net. This guide walks through every limb of the residence test, the residually-not-ordinarily-resident (RNOR) middle status, and the 2020 deemed-resident rule that catches high-income Indian citizens who pay tax nowhere.

FEMA / DTAA Position

Two separate laws use the word "resident", and they do not agree. The Income Tax Act 1961 decides your tax residence purely on days-in-India under Section 6, while the Foreign Exchange Management Act 1999 (FEMA) decides your exchange-control residence on intention plus a 182-day test under Section 2(v). A person can be a FEMA non-resident (running NRE and NRO accounts) yet an income-tax resident in the same year, because the two statutes measure different things. Always resolve your residential status under the Income Tax Act first when computing tax.

The core income-tax test in Section 6(1) has two limbs, and satisfying either one makes you a resident for the previous year. Limb (a): you were in India for 182 days or more during that previous year. Limb (b): you were in India for 60 days or more in the previous year and 365 days or more across the four preceding previous years. Fail both and you are a non-resident for that year, taxable in India only on Indian-source income.

The 60-day limb of Section 6(1) is relaxed for people who leave or visit India. For an Indian citizen who leaves India during the previous year for employment abroad, and for an Indian citizen or person of Indian origin (PIO) who comes on a visit to India, the 60-day threshold is stretched to 182 days. The Finance Act 2020, effective from assessment year 2021-22, cut that relaxed limit to 120 days for a visiting citizen or PIO whose total Indian-source income exceeds Rs 15 lakh in the previous year.

Where a tie arises because two countries both treat you as resident, the relevant Double Taxation Avoidance Agreement (DTAA) breaks it. The India-United States treaty, in force since 12 September 1991, applies a tie-breaker cascade in Article 4 (permanent home, then centre of vital interests, then habitual abode, then nationality). The India-UK treaty (effective 26 October 1993) carries the same Article 4 tie-breaker. A Tax Residency Certificate is the document that lets you invoke these treaties.

Tax Treatment in India

Your day-count determines the width of the Indian tax net, not just the rate. A resident and ordinarily resident is taxed on worldwide income; a non-resident is taxed only on income that is received, accrues or arises in India, or is deemed to under Section 9. Between the two sits RNOR, defined in Section 6(6): you are not-ordinarily-resident if you were a non-resident in 9 of the 10 preceding previous years, or you were in India for 729 days or less in the 7 preceding previous years. An RNOR pays Indian tax on Indian income but keeps most foreign income outside the net.

The tests are easier to hold in one table. All thresholds below are day-counts of physical presence in India during the relevant period, drawn from Sections 6(1), 6(1A) and 6(6) of the Income Tax Act 1961.

The Finance Act 2020 added Section 6(1A), the deemed-resident rule, effective from assessment year 2021-22. An Indian citizen whose total income other than from foreign sources exceeds Rs 15 lakh in the previous year, and who is not liable to tax in any other country by reason of domicile, residence or any similar criterion, is deemed to be a resident of India. This closes the "stateless tax resident" gap. A person caught by Section 6(1A) is classified as RNOR under Section 6(6)(d), so the deeming does not drag genuine foreign income into charge; it captures the Indian income of citizens who had arranged to be tax-resident nowhere.

Rates for non-residents follow the same slab schedule as residents once status is fixed, but two features bite harder. First, the basic exemption and the Section 87A rebate treatment differ: for FY 2025-26 the Section 87A rebate in the new regime is Rs 60,000 for resident individuals with total income up to Rs 12 lakh, and non-residents cannot claim this rebate at all. Second, surcharge stacks on top of tax at 10% above Rs 50 lakh, 15% above Rs 1 crore, 25% above Rs 2 crore, and a maximum of 25% in the new regime for income above Rs 5 crore (the higher old-regime rate does not apply once you opt for the new regime), followed by 4% health and education cess on the total.

TDS is where NRIs feel Section 6 most directly. Payments to a non-resident are subject to withholding under Section 195 at the rates in force, and the payer must file Form 15CA (with a chartered accountant's Form 15CB where required) before remitting. Interest on an NRO deposit is taxed and suffers TDS, whereas interest on an NRE deposit is exempt under Section 10(4)(ii) only so long as you qualify as a person resident outside India under FEMA. Use the NRI tax calculator to model your slab liability and the rental income tax calculator for Indian property income, which is always taxable in India regardless of residence.

Tax Treatment Abroad

Once India has taxed your Indian-source income, your country of residence usually taxes the same income again and then gives credit for the Indian tax paid. The India-US DTAA provides this relief in Article 25, and the India-UK DTAA in Article 24: the residence country grants a foreign tax credit for tax paid in the source country. Capital gains are never zero-rated away under these treaties; India retains full taxing rights on long-term capital gains at 12.5%, and the residence country then credits that Indian tax against its own charge.

The withholding rates the treaty caps at, for the three most common NRI corridors, are set out below. These are DTAA-limited rates on India-source income paid to a treaty resident who furnishes a valid Tax Residency Certificate and Form 10F; without the certificate, domestic Section 195 rates apply.

The US treaty carries a wrinkle worth Rs 1,000s to a shareholder: the 25% portfolio rate on dividends in Article 10 drops to 15% only where the recipient holds at least 10% of the voting stock of the paying company. The UAE treaty caps dividends at a flat 10% but, per its protocol notes, capital gains on shares of an Indian company remain taxable in India. To claim any of these capped rates you must be able to prove residence in the treaty country; a UAE claim in particular requires proof of a UAE establishment behind the Tax Residency Certificate.

India lets you run the credit the other way too when you are the Indian resident with foreign income. Foreign tax credit is granted under Rule 128 of the Income Tax Rules, claimed by filing Form 67 on or before the return due date, and is limited to the lower of the Indian tax or the foreign tax on that doubly-taxed income (incometax.gov.in). This matters most in the year you change status: an RNOR returning to India can find a single year's foreign salary taxed in both countries, with Form 67 the only route to relief. Model the interaction with the foreign tax credit calculator.

Repatriation Mechanics

Your income-tax status and your FEMA account type together decide how much money can leave India. FEMA gives three deposit vehicles to a person resident outside India: the NRE (rupee) account, the NRO account (rupee, for Indian income), and the FCNR(B) account (foreign currency). The Reserve Bank's master direction on deposits governs all three, and the repatriation rules differ sharply between them.

Balances in NRE and FCNR(B) accounts are freely repatriable, principal and interest together, because the money originated abroad. NRO balances represent Indian-source income and are subject to a ceiling: under the Foreign Exchange Management (Remittance of Assets) Regulations 2016, an NRI may remit up to USD 1 million per financial year from NRO balances, net of applicable Indian taxes, on production of Form 15CA and Form 15CB. That USD 1 million window resets each 1 April.

The Liberalised Remittance Scheme is a resident's tool, not yours. LRS permits a resident individual to remit up to USD 250,000 per financial year, but NRIs are expressly outside it; an NRI repatriates through the NRO USD 1 million route instead. When your status changes on returning to India, you must redesignate NRE and NRO accounts to resident accounts (or move balances to an RFC account) promptly, as FEMA requires the account type to match your residence. Use the repatriation calculator to plan the tax-and-forms sequence before you initiate a transfer.

FAQ

Does a single extra day in India change my status?

Yes. Section 6(1) is a bright-line day count, so 182 days makes you resident under limb (a) while 181 does not. For a visiting citizen or PIO earning over Rs 15 lakh of Indian income, the line sits at 120 days after the Finance Act 2020. Keep dated boarding passes and immigration stamps; the burden of proving your day-count is on you.

What counts as a "day in India"?

The Act counts days of physical presence in India, and both the day of arrival and the day of departure are generally counted as days in India by the tax department. Part-days therefore work against you. Because the thresholds (182, 120, 60 days) are exact, reconcile your presence against passport stamps for the full 1 April 2025 to 31 March 2026 previous year before filing.

Is RNOR a status I can choose?

No. RNOR under Section 6(6) is automatic: you qualify if you were a non-resident in 9 of the 10 preceding previous years, or present in India for 729 days or less in the 7 preceding previous years. Returning NRIs typically enjoy RNOR for two to three years, during which most foreign income stays outside the Indian net while Indian income is fully taxed.

Can I be an NRI under FEMA but a resident for tax?

Yes, because FEMA (Section 2(v)) and the Income Tax Act (Section 6) apply different tests. You might satisfy the income-tax 182-day limb yet still hold NRE and NRO accounts under FEMA. When they diverge, compute tax on the income-tax definition and keep your bank accounts aligned to the FEMA definition.

Does the deemed-resident rule tax my foreign salary?

No. Section 6(1A) deems an Indian citizen with over Rs 15 lakh of Indian income who is not taxed anywhere else to be resident, but Section 6(6)(d) then classifies that person as RNOR. As an RNOR you pay Indian tax on Indian income and on income from a business controlled in India, not on genuine foreign salary earned and taxed abroad.

How much can I send abroad from my Indian accounts?

From NRE and FCNR(B) balances there is no cap; both are fully repatriable. From an NRO account the limit is USD 1 million per financial year under the FEMA Remittance of Assets Regulations 2016, net of tax and supported by Form 15CA and Form 15CB. The resident-only LRS cap of USD 250,000 does not apply to you.

Which return form does an NRI file?

An NRI with Indian income files ITR-2 (or ITR-3 with business income) on incometax.gov.in, cannot use ITR-1, and reports residential status by ticking "Non-Resident" and disclosing the day-count. Claim treaty relief by attaching Form 10F and your Tax Residency Certificate, and file Form 67 before the due date if you are claiming foreign tax credit.