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Non-Resident Taxation Series | June 2026
Everything in non-resident taxation starts with one question: are you a resident or not? Section 6 of the Income Tax Act 2025 answers that. Get it right, and you know exactly what income India can tax. This article explains who is a Resident, RNOR, and Non-Resident, with every condition, exception, and example from the Act itself.
Non-Resident Taxation Series – fiscalzenith.com
You are reading Article 1: Residential Status – Section 6.
Also in this series: Scope of Income – Section 5 | Deemed Income – Section 9 | Tax Rates – Sections 207 to 217 | TDS on Non-Residents | NRI Provisions | DTAA – Section 159 | Representative Assesse and Agent | PE | ITR Filing
Also in this series: Scope of Income – Section 5 | Deemed Income – Section 9 | Tax Rates – Sections 207 to 217 | TDS on Non-Residents | NRI Provisions | DTAA – Section 159 | Representative Assesse and Agent | PE | ITR Filing
Table of Contents
- 2-Minute Snapshot
- Who is a Resident? Section 6(2) Conditions A and B with a worked example
- Three Exceptions to the 60-Day Rule Sections 6(3), 6(4), 6(5) explained with examples
- The Deemed Resident Rule: Section 6(7)
- RNOR: Resident but Not Ordinarily Resident – Section 6(13) All three conditions, including the HUF manager rule
- Residential Status for Companies, HUFs, and Others
- Practical Compliance Checklist
- Frequently Asked Questions
Section 6
The single provision that determines your entire tax liability boundary in India.
182 Days
Stay in India beyond this in any tax year and you become a resident, regardless of anything else.
Rs. 15 Lakh
Indian income threshold above which the 120-day rule applies to NRI citizens and PIOs visiting India.
3 Categories
Resident (ROR), Resident but Not Ordinarily Resident (RNOR), and Non-Resident (NR). Each has a different tax scope.
SnapshotResidential Status in 2 Minutes
India does not tax everyone the same way. If you are a resident, India taxes your entire worldwide income. Every rupee, every dollar, every euro you earn anywhere in the world comes into the Indian tax net. But if you are a non-resident, India can only tax what you earned or received in India.
That single distinction changes everything. So the first thing we need to figure out, before computing any tax, is which category you fall into.
Section 6 of the Income Tax Act, 2025 (corresponding to Section 6 of the Income Tax Act, 1961) tells you exactly how to determine this. And it is not just resident or non-resident. There is a third category in between called RNOR, which stands for Resident but Not Ordinarily Resident.
| Status | Test | What India Taxes |
|---|---|---|
| Resident and Ordinarily Resident (ROR) | Satisfies Section 6(2); does not fall in Section 6(13) | All worldwide income without exception |
| Resident but Not Ordinarily Resident (RNOR) | Satisfies Section 6(2) but falls in Section 6(13) | Income received or accruing in India, plus foreign income from business controlled in India or profession set up in India |
| Non-Resident (NR) | Does not satisfy Section 6(2); not deemed resident under Section 6(7) | Only income received in India or accruing or arising (or deemed to accrue or arise) in India |
Part IWho is a Resident? Section 6(2)
An individual is a resident in India in a tax year if he satisfies either of the following two conditions:
Condition A: He is in India for a total period of 182 days or more during the tax year.
Condition B: He is in India cumulatively for 60 days or more during the tax year, AND he has been in India cumulatively for 365 days or more in the four preceding tax years.
You only need to satisfy one of these. If either is met, you are a resident.
A Worked Example
Vikram is an NRI who came back to India on 1st November 2025 and stayed until 31st March 2026. That is 151 days in FY 2025-26.
Condition A: 151 days is less than 182. Not satisfied.
Condition B: 60 days is satisfied since 151 exceeds 60. Now check the last 4 years. Vikram was in India for a total of 400 days across the four preceding tax years. 400 exceeds 365. Condition B is satisfied.
Result: Vikram is a resident in FY 2025-26 despite being an NRI for years. His worldwide income is now taxable in India. This is how the 60-day rule catches people off guard when they are not tracking their days carefully.
Part IIThree Exceptions to the 60-Day Rule
Condition B, the 60-day rule, does not apply in certain situations. The legislature recognised that specific groups of people should not become residents simply because they visited India.
Exception 1: Indian Citizens Leaving for Employment or as Ship Crew [Section 6(3)]
If you are an Indian citizen and you leave India in a tax year as a member of the crew of an Indian ship as defined in Section 3(18) of the Merchant Shipping Act 1958, or for the purposes of employment outside India, the 60-day condition does not apply to you. Only the 182-day test applies.
Note: This exception applies only to Indian citizens. It does not apply to Persons of Indian Origin (PIOs). A PIO leaving India for employment abroad is still subject to the 60-day rule unless the income-based exception under Section 6(5) applies.
Exception 2: Indian Citizens and PIOs Visiting India from Abroad [Section 6(4)]
If you are an Indian citizen or a PIO who is living outside India and comes to India on a visit, the 60-day rule does not apply to you either, subject to one income-based condition under Section 6(5).
The Income-Based Modification [Section 6(5)]
If the person referred to in Section 6(4) has total income exceeding Rs. 15 lakh in that tax year excluding income from foreign sources, the 60 days in Condition B are replaced with 120 days.
So the rule becomes: if you are an NRI Indian citizen or PIO with Indian-source income above Rs. 15 lakh, and you stay in India for 120 days or more during the tax year, and you have been in India for 365 days or more in the preceding 4 years, you become a resident.
Practical Example: Meera is an Indian citizen settled in the UK. She earns rental income from Indian property of Rs. 20 lakh per year. She visits India and stays for 130 days in FY 2025-26. She has also been in India for 400 days in the preceding 4 years. Since her Indian income exceeds Rs. 15 lakh, the 60-day rule is modified to 120 days. She was in India for 130 days, which exceeds 120. Result: Meera is a resident in FY 2025-26. Had she stayed only 115 days, she would still be a non-resident.
Part IIIThe Deemed Resident Rule: Section 6(7)
This provision targets Indian citizens who have arranged their affairs such that they are not a tax resident anywhere in the world.
If you are an Indian citizen who is not liable to tax in any other country by reason of your domicile, residence, or a similar criterion, and your total income excluding income from foreign sources exceeds Rs. 15 lakh, you are deemed to be a resident in India for that tax year regardless of how many days you spent here.
Section 6(8) safeguard: The deemed resident rule does not apply if you are already a resident under Sections 6(2) to 6(6). It activates only when you would otherwise be a non-resident. So if you already qualify as a resident through the day-count tests, Section 6(7) is irrelevant to you.
Before this rule existed, some wealthy Indian citizens arranged themselves as residents of nowhere by staying less than 182 days in any country. They paid tax nowhere. Section 6(7) closes that loophole entirely.
Part IVRNOR: Resident but Not Ordinarily Resident
Even if you are technically a resident under Section 6(2), you may be classified as RNOR under Section 6(13). This matters significantly because an RNOR does not get taxed on foreign income unless it is from a business controlled in India or a profession set up in India.
A person is RNOR if they satisfy any one of the following three conditions:
Condition (a): The Long-term Non-Resident Test
An individual who has been a non-resident in India in 9 out of the 10 tax years preceding the current year, OR who has been in India cumulatively for 729 days or less in the 7 tax years preceding the current year.
In the case of a Hindu Undivided Family, the same test applies to its manager (karta).
Condition (b): The 120-Day Visitor Test
A citizen of India or a PIO whose total income excluding income from foreign sources exceeds Rs. 15 lakh as mentioned in Section 6(5), AND who has been in India for 120 days or more but less than 182 days during the tax year.
Condition (c): The Deemed Resident
A citizen of India who is deemed to be resident under Section 6(7).
RNOR in Practice: Think of RNOR as a transitional status. You have become technically resident in India, perhaps after returning from years abroad, but you are not yet fully pulled into the Indian tax system. Your foreign income that is not connected to Indian business or profession stays outside the Indian tax net. A returning NRI often gets RNOR status for 1 to 3 years depending on how long they were abroad and how many days they spent in India in recent years.
Part VResidential Status for Companies, HUFs, and Others
HUF, Firm, AOP [Section 6(9)]
A Hindu Undivided Family, firm, or association of persons is resident in India unless the control and management of its affairs is situated wholly outside India during the tax year. Note the word “wholly.” If even a part of the management is in India, the entity is resident.
Companies [Section 6(10)]
A company is resident in India if it is an Indian company, or if its Place of Effective Management (POEM) is in India during the tax year. POEM means the place where key management and commercial decisions necessary for the conduct of the company’s business as a whole are, in substance, made.
Warning for foreign companies: A foreign company whose board meetings happen in India, or whose real decision-making happens in India, can be treated as an Indian resident under Section 6(10). This matters enormously for multinational groups with India-based executives who make key decisions.
Every Other Person [Section 6(11)]
Every other person including trusts and associations is resident unless the control and management of affairs is situated wholly outside India.
The Consistency Rule [Section 6(12)]
If a person is resident in India in a tax year for any source of income, they are deemed resident for all their other sources of income as well in that year. You cannot be resident for one income source and non-resident for another in the same year.
| Person Type | Resident If | Non-Resident If | Section |
|---|---|---|---|
| Individual | 182+ days in India (Condition A), or 60+ days + 365+ days in preceding 4 years (Condition B) | Neither condition satisfied and not deemed resident under 6(7) | Section 6(2) |
| Individual (deemed) | Indian citizen, not taxable anywhere, Indian income over Rs. 15 lakh | Taxable somewhere else, or income below Rs. 15 lakh | Section 6(7) |
| HUF | Control and management at least partly in India | Control and management wholly outside India | Section 6(9) |
| Company | Indian company, or POEM in India | Foreign company with POEM outside India | Section 6(10) |
| Any other person | Control and management at least partly in India | Control and management wholly outside India | Section 6(11) |
ChecklistPractical Compliance Checklist
If you are an NRI who visited India this year
- Count your total days of stay in India during the tax year precisely. Include every day of arrival and departure.
- If your Indian-source income excluding foreign sources exceeds Rs. 15 lakh, crossing 120 days triggers RNOR risk. Crossing 182 days makes you a full resident.
- Check your cumulative India days in the preceding 4 years. If that total crosses 365, even 60 days in the current year makes you a resident under Condition B.
If you are an Indian citizen with no tax residence anywhere
- Section 6(7) applies to you if your Indian-source income exceeds Rs. 15 lakh. You will be treated as a deemed resident regardless of days in India.
- To avoid this, you must establish genuine tax residence in another country through domicile, residence, or a similar criterion recognised by that country’s law.
If you are a foreign company with Indian founders or executives
- Conduct a POEM analysis every year. If key management and commercial decisions are made in India, even if board meetings are held abroad, the company may be treated as resident in India under Section 6(10).
- Document where decisions are actually made, not just where meetings are formally held.
If you returned to India permanently this year
- Check whether you qualify as RNOR under Section 6(13). If you were non-resident for 9 of the last 10 years, or your India days were 729 or fewer in the last 7 years, you are RNOR this year.
- As RNOR, your foreign income from a foreign employer for foreign services is not taxable in India. Plan remittances accordingly.
Wrapping Up
Residential status is the foundation of everything in non-resident taxation. Get this wrong, and every calculation that follows is built on a flawed base. Section 6 is detailed but logical. The 182-day test is clear. The 60-day test has exceptions. The RNOR concept protects returning NRIs from an abrupt worldwide tax exposure. And the deemed resident rule ensures nobody escapes Indian tax by staying perpetually stateless.
Once you know your status, the next question is: what income does India tax you on? That is answered by Section 5, covered in the next article of this series.
Frequently Asked Questions
It depends on your preceding 4 years. Since your Indian income exceeds Rs. 15 lakh, the 60-day Condition B is modified to 120 days. You stayed 125 days, which exceeds 120. Now check your cumulative India days in the preceding 4 tax years. If that total is 365 or more, both modified Condition B requirements are met and you are a resident. If the total is below 365, you are a non-resident since only Condition A (182 days) applies without the preceding-year test being met.
An RNOR is technically a resident, meaning they satisfy Section 6(2). But their foreign income is not fully taxable. Under Section 5(1)(c), an RNOR’s foreign income is included in total income only if it is derived from a business controlled in India or a profession set up in India. A non-resident’s foreign income is entirely outside the Indian tax net. The practical difference matters most for returning NRIs who have foreign salary, pension, or investment income.
Very likely yes. Under Section 6(10), a foreign company is resident in India if its Place of Effective Management (POEM) is in India. POEM is where key management and commercial decisions for the business as a whole are, in substance, made. If your CEO and directors are based in India and making strategic decisions from India, the POEM is in India. This makes the Singapore company an Indian resident, exposing its worldwide income to Indian tax.
Section 6(7) may apply if you are not liable to tax in the UAE by reason of domicile, residence, or a similar criterion, and your Indian income excluding foreign sources exceeds Rs. 15 lakh. In the UAE’s case, the absence of personal income tax means you may indeed not be liable to tax there. This triggers Section 6(7) and makes you a deemed resident in India. Importantly, you will be RNOR under Section 6(13)(c) since deemed residents are classified as RNOR, which means only your India-source income is taxable, not any foreign income you earn.
Both the day of arrival in India and the day of departure from India are counted as days spent in India. So if you arrive on 1st April and leave on 30th September, that is 183 days including both endpoints. There is no concept of half-days or partial-day exclusions under Section 6. Maintain travel records including passport stamps, flight tickets, and boarding passes to support your day count in case of scrutiny.
Disclaimer: For informational and educational purposes only. Based on the Income Tax Act 2025, Income Tax Rules 2026, and provisions as amended by the Finance Act 2026, current as of June 2026. Does not constitute legal or tax advice.
