When an Indian citizen living abroad is resident in India for tax: the day tests, the INR 15 lakh line and not ordinarily resident

Under section 6 of the Income-tax Act, 2025, in force from 1 April 2026, an Indian citizen living abroad is resident in India for a tax year on 182 days or more in India, or on 60 days plus 365 days in the four years before, but a citizen on a visit from abroad is outside the 60-day test unless total income other than income from foreign sources exceeds INR 15 lakh, when the test runs at 120 days. A citizen with such income above INR 15 lakh who is liable to tax in no other country is deemed resident, but only as a person not ordinarily resident (NOR), and a person in that class is taxed on income from outside India only if it comes from a business controlled in India or a profession set up in India.

Where does the residence rule sit, and from when?

The Income-tax Act, 2025 (No. 30 of 2025) says in section 1(3) that, save as otherwise provided, it comes into force on 1 April 2026. Section 3(1) defines a "tax year" as the twelve months of the financial year starting on 1 April, so the first tax year under the new Act is 2026-27, ending on 31 March 2027. Section 6 fixes residential status, and section 5 uses it to say what income is charged.

The Taxation and Other Laws (Amendment) Act, 2026 (No. 21 of 2026) does not amend sections 5 or 6 of the 2025 Act; we have not read the Finance Act, 2026.

A "non-resident Indian" (section 212(d)) is a non-resident citizen of India or person of Indian origin (section 2(78): born, or with a parent or grandparent born, in undivided India), so an overseas citizen of India cardholder is covered only if that birth line is met.

What are the day tests for an individual?

Section 6(2) makes an individual resident in India in a tax year if he is in India for a total of 182 days or more in that year, or is in India cumulatively for 60 days or more in that year and has been in India cumulatively for 365 days or more in the four years preceding it.

Section 6(3) removes the second limb for a citizen of India who leaves India in the year as a member of the crew of an Indian ship, or for the purposes of employment outside India. For that citizen only the 182-day limb can make him resident, subject to deemed residence under section 6(7).

What does the visit exception change?

Section 6(4) disapplies the 60-day limb, subject to section 6(5), for an individual who is a citizen of India or a person of Indian origin and who, being outside India, comes on a visit to India in the tax year. A visitor of that kind becomes resident only through the 182-day limb.

Section 6(5) cuts the exception back. Where such a person has a total income exceeding INR 15 lakh in the year, "other than the income from foreign sources", the 60-day limb applies as if "sixty days" read "one hundred and twenty days". The 365-day condition over the four preceding years stays. Section 6(14) defines "income from foreign sources" as income accruing or arising outside India, excluding income derived from a business controlled in India or a profession set up in India, and not deemed to accrue or arise in India.

So the INR 15 lakh figure is counted on income other than income from foreign sources, which keeps foreign income from a business controlled in India inside the count.

When is a citizen deemed resident?

Section 6(7) applies irrespective of sections 6(2) to 6(6). An individual is deemed resident in a tax year if he is a citizen of India, is "not liable to tax in any other country or territory due to his domicile, residence, or similar criteria", and has total income exceeding INR 15 lakh in the year, other than income from foreign sources. All three conditions must hold. Section 6(8) switches the rule off for an individual who is resident under sections 6(2) to 6(6), so it operates only where the day tests leave a citizen non-resident. It does not reach a person of Indian origin who is not a citizen, because clause (a) says citizen of India.

Who is not ordinarily resident?

Section 6(13) lists three kinds of individual who are not ordinarily resident in a tax year:

• an individual who has been a non-resident in nine of the ten tax years preceding the year, or who has been in India cumulatively for 729 days or less in the seven tax years preceding it;
• a citizen of India or person of Indian origin whose total income excluding income from foreign sources exceeds INR 15 lakh in the year, as mentioned in section 6(5), and who has been in India for 120 days or more but less than 182 days in the year; and
• a citizen of India who is deemed resident under section 6(7).

A person who is not ordinarily resident is still a resident under section 6(2) or 6(7); the label then narrows the income charged.

What follows for Indian income and foreign income?

Section 5(1) charges a resident on income received or deemed received in India, income accruing or arising or deemed to accrue or arise in India, and income accruing or arising outside India. When the resident is not ordinarily resident, section 5(1)(c) includes the outside-India income "only when it is derived from a business controlled in or a profession set up in India". Section 5(2) charges a non-resident only on income received or deemed received in India and on income accruing or arising, or deemed to, in India. Section 6(12) adds that a person resident for any source of income is resident for every other source in the year.

What does a Dubai-based engineer's year look like?

An illustration. The engineer, the visits, the incomes and the history below are hypothetical. Figures are taken as total income for the year, after whatever deductions apply. Salary for days worked while in India may itself accrue in India, which the illustration ignores. The engineer is a citizen of India who works in Dubai and visits India for family. Facts assumed: he was a non-resident in each of the ten preceding tax years and spent 100 days a year in India in each of the four preceding years, 400 days in all. In 2026-27 his Indian income is rent and bank interest, and his Dubai salary is INR 45 lakh.

Visits in 2026-27 (tax year 1 April 2026 to 31 March 2027)
  April to May      20 days
  August            30 days
  October, Diwali   20 days
  December, January 30 days
  Total            100 days

Case 1: 100 days, Indian income INR 8 lakh
  Section 6(2)(b) would be met (100 and 400), but section 6(4) disapplies it
  Section 6(5) not engaged (income not above INR 15 lakh)
  Section 6(7) fails on income        non-resident: India taxes the INR 8 lakh

Case 2: 100 days, Indian income INR 18 lakh
  Section 6(5): 120 days applies, and 100 is below it
  Section 6(7) if he is liable to tax elsewhere     non-resident
  Section 6(7) if he is liable to tax nowhere       deemed resident, and
                                                    not ordinarily resident:
                                                    INR 18 lakh taxed,
                                                    Dubai salary outside

Case 3: a fifth visit takes the year to 125 days, Indian income INR 18 lakh
  Section 6(5): 125 is at least 120, and 400 is at least 365
                                      resident (section 6(2)(b))
  Section 6(13)(a)(i) and (b)         not ordinarily resident
  Charged: INR 18 lakh; the INR 45 lakh Dubai salary is outside the charge

Case 4: 125 days, Indian income INR 8 lakh
  Section 6(4) applies, section 6(5) not engaged   non-resident

Case 5: 190 days, Indian income INR 18 lakh
  Section 6(2)(a)                     resident
  Non-resident in all ten preceding years   not ordinarily resident
                                      (section 6(13)(a)(i))
  Charged: INR 18 lakh; the Dubai salary is outside the charge

Only in Case 5, and only on a different history, would he be ordinarily resident and the INR 45 lakh enter the charge: resident in two or more of the ten preceding years and 730 days or more in the seven.

The arithmetic shows two cliffs. The same 125 days make him non-resident at INR 8 lakh of Indian income and resident at INR 18 lakh, a difference of INR 10 lakh of rent and interest. And had the four preceding years totalled 300 days rather than 400, Case 3 would fail the 365-day condition under section 6(2)(b) and would then turn on section 6(7), as Case 2 does.

What remains unsettled?

First, section 6(7)(b) asks whether the citizen is "not liable to tax in any other country or territory due to his domicile, residence, or similar criteria". The Act does not say whether a person resident in a country that levies no personal income tax, which is the position Case 2 imagines, is "not liable" in that sense. We have not read official guidance on it.

Second, the Act does not, in section 6, say how a day is counted when a person arrives or leaves part-way through it, and we have not read the rules that may supply a convention. Cases near 60, 120 or 182 days depend on it.

Third, section 6(5) and section 6(7)(c) speak of "total income" exceeding INR 15 lakh, other than income from foreign sources. Whether that is measured before or after deductions, and whether an exempt item counts, is not stated in section 6, and the illustration sidesteps it.

Fourth, section 2(72) counts a not ordinarily resident person as a non-resident only for sections 161, 174 and 312, while section 212(d) defines a non-resident Indian as an individual "who is not a resident". Read plainly, an individual who is resident but not ordinarily resident falls outside the special investment-income regime in sections 212 to 218. We have not seen official guidance on that point.