NRI residential status, explained

Why it matters more than the tax rate

Your status for a year decides what India can tax. A non-resident is taxed on income that arises or is received in India. A resident and ordinarily resident is taxed on worldwide income and must report foreign assets and accounts in Schedule FA of the return.

Getting this wrong in the optimistic direction is the expensive mistake. Someone who decides they are non-resident and so leaves foreign assets out of the return is exposed under the Black Money Act, where the penalties are flat and severe and do not shrink with the size of the omission.

Step one: are you resident at all?

The rules are in section 6 of the Income-tax Act, 2025, which kept the tests of the 1961 Act it replaced. You are resident for a year if either of these is true:

• You were in India for 182 days or more in that financial year.
• You were in India for 60 days or more in the year and 365 days or more across the four years before it.

The exceptions that catch NRIs out

The 60-day test is relaxed to 182 days for an Indian citizen who left India during the year for work abroad, or as crew on an Indian ship.

It is relaxed to 182 days, too, for an Indian citizen or person of Indian origin who is abroad and visits India, but only if their Indian income is at or below ₹15 lakh. Above ₹15 lakh the test drops to 120 days. This 120-day rule came from the Finance Act 2020, and many online calculators still apply 182.

Separately, an Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country is treated as resident even if the day counts would not make them one. This is called deemed residence, and a person who is resident only by deeming is not ordinarily resident.

Step two: ordinarily resident or not?

A resident is ordinarily resident unless one of these is true, in which case they are resident but not ordinarily resident (RNOR):

• They were non-resident in 9 or more of the 10 years before.
• They were in India for 729 days or fewer across the 7 years before.
• They are a visiting Indian citizen or person of Indian origin with Indian income above ₹15 lakh, and were in India for 120 to 181 days.
• They are resident only by deeming.

What each status means

Non-resident (NRI): India taxes income that arises or is received in India. Foreign income and foreign assets are outside the Indian return.

Resident but not ordinarily resident (RNOR): Indian income is taxable. Foreign income generally is not, unless it comes from a business controlled from India or a profession set up here. It is often the most favourable status, and it does not last.

Resident and ordinarily resident (ROR): worldwide income is taxable and foreign assets must be reported.

What this does not settle

Tax treaties can change where an income is taxed even when your status is clear. Part-year moves, crew day counts and dual residence need working through with your actual dates. A form, including ours, can only give an indication.