Section 6 of the Income-tax Act, 2025 — Residence in India: How Your Tax Residential Status Is Decided

In plain language

What Section 6 actually does

Section 6 of the Income-tax Act, 2025 (the successor to Section 6 of the Income-tax Act, 1961, effective for tax years starting on or after 1 April 2026) decides one thing that governs your entire tax bill: your residential status. It does not tax you — but it decides how much of your income India can tax. A Resident and Ordinarily Resident (ROR) is taxed on worldwide income; a Resident but Not Ordinarily Resident (RNOR) and a Non-Resident (NRI) are broadly taxed only on income earned or received in India.

The two basic tests to become a Resident

You are a Resident in a tax year if you satisfy either of these day-count tests:

• Test 1 (182-day test): You are in India for 182 days or more during the tax year; or
• Test 2 (60 + 365 day test): You are in India for 60 days or more in the tax year and 365 days or more in the four preceding tax years put together.

If you meet neither, you are a Non-Resident for that year.

The relaxations — who gets the easier 182-day rule

• Indian citizens leaving India for employment or as a crew member of an Indian ship: the 60-day limb of Test 2 is stretched to 182 days. So they become resident only if they stay 182+ days. This protects genuine workers going abroad.
• Indian citizens or Persons of Indian Origin (PIO) visiting India: normally the 60-day limb is relaxed to 182 days. But if their Indian income (income other than from foreign sources) exceeds ₹15 lakh in the year, the limb becomes 120 days instead of 182. Stay 120–181 days with high Indian income and you are pulled into residency.

The deemed-resident rule (the "stateless Indian" clause)

An Indian citizen whose Indian income exceeds ₹15 lakh 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 — regardless of how few days he spends here. This targets high earners who arrange their affairs to be tax-resident nowhere.

Ordinarily vs Not Ordinarily Resident (RNOR)

Once you are a Resident, a second layer decides whether you are ROR or RNOR. You are treated as Not Ordinarily Resident (RNOR) — and thus escape tax on most foreign income — if you meet any of these:

• You were a Non-Resident in 9 of the 10 preceding tax years; or
• You were in India for 729 days or less across the 7 preceding tax years; or
• You are a citizen/PIO visitor with Indian income over ₹15 lakh caught by the 120-day rule; or
• You are a deemed resident under the ₹15-lakh clause.

Why it matters in practice

• NRIs returning to India usually enjoy RNOR status for 2–3 years, keeping foreign salary, rent and interest out of the Indian net.
• Frequent flyers should track days carefully — a single extra trip can flip status and expose global income.
• Day counting counts both the day of arrival and the day of departure in India in most practices, so keep passport stamps and travel records.
• Status is decided afresh every year; last year's NRI status does not carry over automatically.

Section 6 works hand-in-hand with the scope of total income provision (Section 5 of the 1961 Act) which uses your status to decide what income is taxable, and with Double Taxation Avoidance Agreements (DTAAs) and the tie-breaker rules where two countries both claim you.