Determination of Residential Status for Individuals under Section 6: Complete Guide (FY 2025–26 / AY 2026–27)

Whether you are an Indian citizen moving abroad for employment, a Non-Resident Indian (NRI) visiting family in Connaught Place, South Delhi, or Gurugram, or an expatriate executive posted in India, one fundamental question dictates your exact tax burden: What is your residential status under Section 6 of the Income Tax Act, 1961?

Many taxpayers mistakenly believe that holding an Indian passport or having foreign citizenship automatically defines their tax liability. However, the Indian Income Tax Department strictly evaluates your physical presence—the actual number of days you spend physically within the physical boundaries of India during a financial year (1st April to 31st March).

In this comprehensive guide, our experienced Chartered Accountants and senior tax consultants at Delhi Tax Solutions break down the step-by-step provisions of Section 6, basic and additional conditions, recent statutory amendments, and practical day-counting strategies for Financial Year 2025–26 (Assessment Year 2026–27).

1. Why Determining Residential Status is Critical for Tax Planning

Under Indian income tax laws, citizenship has almost zero bearing on taxability (except in special deemed residency clauses). Instead, Section 5 of the Income Tax Act links your total global income scope directly to your residential status determined under Section 6.

Depending on your residency classification, your income tax liability varies dramatically:

• Resident and Ordinarily Resident (ROR): Your total worldwide income is taxable in India. This includes foreign salary, offshore business profits, dividends from foreign stocks, and overseas rental income.
• Resident but Not Ordinarily Resident (RNOR): You are taxed on all income earned, accrued, or received in India. Foreign income remains exempt, unless it is derived from a business controlled from or a profession set up in India.
• Non-Resident (NR): You are strictly taxed ONLY on income that accrues, arises, or is received directly in India (such as rental income from Indian property, interest on NRO accounts, or domestic capital gains). Your global income stays entirely outside the Indian tax net.

2. Step-by-Step Categorization under Section 6(1)

To determine an individual’s residential status, we follow a two-tier evaluation framework: first, testing basic residency under Section 6(1), and second, determining ordinal residency under Section 6(6).

Step 1: Basic Conditions to Qualify as a Resident

An individual is classified as an Indian Tax Resident for FY 2025–26 if they satisfy ANY ONE of the following two basic conditions:

1. Condition A (182-Day Rule): The individual has been in India for a cumulative period of 182 days or more during the relevant financial year (April 1, 2025, to March 31, 2026).
2. Condition B (60-Day + 365-Day Rule): The individual has been in India for a period of 60 days or more during the financial year AND for 365 days or more in aggregate during the 4 preceding financial years (FY 2021–22 to FY 2024–25).

If an individual fails to satisfy both Condition A and Condition B, they are unequivocally classified as a Non-Resident (NR) for that financial year.

3. Statutory Exceptions: Relaxation of the 60-Day Rule

To prevent unfair tax burdens on outbound Indian workers, seafarers, and visiting NRIs, the Income Tax Act explicitly replaces the 60-day limit in Condition B with higher thresholds for specific categories of individuals.

Exception 1: Indian Citizens Leaving India for Overseas Employment or Ship Crew

If an Indian citizen leaves India during the financial year for the purpose of taking up employment abroad, or as a crew member of an Indian ship, Condition B is completely neutralized. Such individuals will qualify as a Resident only if their stay in India reaches 182 days or more during that financial year.

Exception 2: NRIs and Persons of Indian Origin (PIO) Visiting India

When an Indian citizen or a Person of Indian Origin (PIO)—someone whose parents or grandparents were born in undivided India—resides abroad and visits India, relaxed rules apply based on their total Indian-sourced income:

• If Total Indian Income is up to ₹15 Lakh: The 60-day threshold in Condition B is replaced by 182 days. They remain Non-Residents as long as their total stay during the visit does not reach 182 days.
• If Total Indian Income EXCEEDS ₹15 Lakh: The 60-day threshold in Condition B is replaced by 120 days. If such an individual stays in India for 120 days or more (but less than 182 days) AND has stayed 365 days or more in the preceding 4 years, they become an Indian Resident. However, they are granted special RNOR status under Section 6(6)(c).

4. Deemed Residency under Section 6(1A)

Introduced to curb tax avoidance by ultra-high-net-worth individuals operating in non-taxable or zero-tax jurisdictions (such as UAE, Cayman Islands, Qatar, or Monaco), Section 6(1A) contains an anti-abuse provision known as Deemed Residency.

An individual will be automatically deemed to be a Resident of India if ALL the following conditions are met:

1. The individual is an Indian Citizen.
2. Their total income from Indian sources (excluding pure foreign-sourced income) exceeds ₹15 Lakh during the financial year.
3. They are not liable to pay tax in any other country or territory by reason of their domicile, residence, or place of incorporation.

5. Distinguishing ROR vs. RNOR under Section 6(6)

Once an individual crosses the residency threshold under Step 1, the next tax step is determining whether they are a Resident and Ordinarily Resident (ROR) or a Resident but Not Ordinarily Resident (RNOR).

An individual will enjoy the beneficial RNOR status if they satisfy ANY ONE of the following conditions specified under Section 6(6):

1. The 9/10 Non-Residency Rule: The individual has been a Non-Resident in India in 9 out of the 10 preceding financial years.
2. The 729-Day Rule: The individual has stayed in India for a total period of 729 days or less during the 7 preceding financial years.
3. The Visiting NRI Rule (120 to 181 Days): An Indian citizen or PIO with Indian income exceeding ₹15 Lakh whose physical presence in India is between 120 days and 181 days during the financial year.
4. Deemed Resident Rule: Any citizen classified as a deemed resident under Section 6(1A).

If a resident individual does NOT meet any of the RNOR concessions above, they are categorized as a Resident and Ordinarily Resident (ROR), and their global assets and foreign income must be disclosed in Schedule FA of their Indian Income Tax Return.

6. Comprehensive Scope of Taxability Matrix

The operational framework of Section 5 and Section 6 can be summarized in the clear taxability reference table below:

Type of Income / Source	Resident & Ordinarily Resident (ROR)	Resident but Not Ordinarily Resident (RNOR)	Non-Resident (NR)
Income received or deemed to be received in India	Taxable	Taxable	Taxable
Income accruing or arising in India (e.g., salary for services rendered in India)	Taxable	Taxable	Taxable
Foreign Income from a business controlled from India or profession set up in India	Taxable	Taxable	Exempt
Pure Foreign Income (earned, accrued, and received outside India)	Taxable	Exempt	Exempt

7. Practical Rules for Counting Days in India

Calculating days spent in India requires meticulous record-keeping. The Income Tax Department enforces precise guidelines when evaluating travel logs during tax audits or scrutiny assessment proceedings:

• Both Arrival and Departure Days Count: The day you land at Indira Gandhi International (IGI) Airport, New Delhi, and the day you take off count as full days spent within India, regardless of landing or departure times.
• Continuity is Unnecessary: Physical presence does not need to be continuous or in a single stretch. Days are calculated on a cumulative basis across all visits between April 1 and March 31.
• Crucial Documentation: Retain passport copies, physical entry/exit stamps, e-visas, airline boarding passes, and flight booking confirmations. These serve as primary evidence if the department issues a notice under Section 142(1).
• Impact of DTAA (Double Taxation Avoidance Agreement): If an individual becomes a tax resident of both India and another country (e.g., UAE, USA, UK), tie-breaker rules under Section 90 (DTAA) determine final residency based on permanent home, center of vital interests, or habitual abode.

8. How Delhi Tax Solutions Assists NRIs and Global Indian Taxpayers

Miscalculating your residential status can result in severe legal consequences, including unexpected tax demands, penalties for non-disclosure of foreign assets under the Black Money Act, or loss of double-taxation relief. Navigating Section 6 alongside international tax treaties requires professional CA assistance.

At Delhi Tax Solutions, our senior chartered accountants and international tax specialists assist clients in Delhi NCR and across the globe with:

• Exact Residential Status Evaluation: Thorough auditing of travel schedules, flight logs, and passport stamps before filing tax returns.
• DTAA Relief & Foreign Tax Credit (FTC): Preparing and submitting Form 67 to claim foreign tax credits and eliminate double taxation legally.
• Lower TDS Certificates (Form 13): Securing low or nil TDS certificates from the tax department for NRIs selling residential property in Delhi, Noida, or Gurugram.
• Foreign Asset Reporting (Schedule FA): Ensuring full compliance with international disclosure mandates for Ordinarily Residents with overseas investments.
• Expat & NRI Income Tax Returns: End-to-end filing for NRE/NRO account interest, property transactions, capital gains, and global income.