NRI residency status: are you an NRI, RNOR or resident this tax year?

What your status decides

India has three residency statuses for an individual, and each one sets how much of your income India can tax 2025 Act s. 5was s. 5.

As a non-resident, India taxes only income that arises in India or that you receive in India: rent from a flat in Pune, interest on an NRO deposit, a gain on Indian shares or property, a salary for work done here. Your salary abroad, your foreign bank interest and gains on foreign shares are outside Indian tax, even if you later bring the money home. You file an Indian return only if your Indian income calls for one. That’s the position most of this site’s guides assume.

As a resident and ordinarily resident, India can tax your worldwide income. Your salary abroad, foreign rent, foreign dividends and gains are all in the return. You claim credit for tax you paid abroad, usually under the tax treaty, and you report your foreign bank accounts, shares, property and retirement accounts in the foreign-assets schedule, even if they earned nothing.

Resident but not ordinarily resident, or RNOR, sits in between. You’re resident for the year, but India taxes your foreign income only if you receive it in India, or it comes from a business controlled in India or a profession set up here. For most people that means India taxes the same income it taxed while you were an NRI. The status exists for people who have been away for years and for a few special cases described below.

Your status is decided for each tax year on its own. Being an NRI last year doesn’t make you one this year, and one busy year of visits doesn’t lock you in. Your visa and where your family lives don’t decide it, and citizenship matters only for the exceptions below. The days you spend in India do most of the work.

The day tests

There are two tests, and meeting either makes you resident 2025 Act s. 6(2)-(5)was s. 6(1).

The first is the one most people know. Spend 182 days or more in India in the tax year and you’re resident. It doesn’t matter why you were here, whether you worked, or whether you’re a citizen. A long family visit, an illness, a project that overran: the count is the count.

The second test catches people who come often. You’re also resident if you spend 60 days or more in India this year and 365 days or more over the previous 4 tax years. That’s the test that can surprise a foreign national on a long assignment.

For most readers of this site, though, the second test doesn’t apply. It’s switched off for two groups:

• an Indian citizen who leaves India this year for a job abroad, or as a member of the crew of an Indian ship; and
• an Indian citizen or person of Indian origin who lives abroad and comes to India on a visit, unless their Indian income for the year is above ₹15 lakh.

For both groups, only the first test counts: under 182 days and you’re not resident by days.

The visiting exception is for people who live abroad and come to India on a visit. We treat coming back to live in India as not a visit, so the second test applies to you in full that year, whatever your income. The Act doesn’t spell out how the year you move is treated, especially if you visited earlier in it, and there’s no CBDT guidance, so ask a CA if your days fall between the two tests. On that reading, someone who moves home in October, having spent plenty of time here in earlier years, can be resident with well under 182 days. They’ll usually be RNOR, as described below.

A “person of Indian origin” means you, a parent or a grandparent was born in undivided India, which covers most OCI cardholders.

Counting the days is where people slip. Count the day you land and the day you fly out as days in India. That’s the reading of an advance ruling and the safe one, but it isn’t settled: the Act doesn’t define a day, and at least one Tribunal has left out the arrival day. Either way, two trips can use up more days than the calendar suggests. Indian citizens working as crew on foreign-bound ships count days under their own rule, based on the dates in their Continuous Discharge Certificate. Read our guide to counting your days for the edge cases and the records to keep.

Visiting with higher Indian income

The exception for visitors has its own exception. If you’re a citizen or a person of Indian origin visiting from abroad and your Indian income for the year is above ₹15 lakh, the second test does apply to you, but with 120 days in place of 60 days. You’d still need 365 days or more over the previous 4 tax years.

“Indian income” here means your total income for the year without income from foreign sources: rent, NRO and FD interest, dividends from Indian companies, capital gains on Indian shares, mutual funds and property, and pay for work done in India. Your salary abroad doesn’t count towards it.

The income test is where a one-off event matters. Sell a flat in India and the gain alone can take you over the threshold for that year. If you also spent 120 days or more in India, sorting out the sale and seeing family, you could be resident that year when you’d expect to be an NRI.

The rule has a soft landing. Anyone who becomes resident only this way is treated as RNOR, not as ordinarily resident, so your foreign income stays outside Indian tax. What changes is mostly paperwork and a few Indian-income rules that differ for residents. See how the higher-income visitor rule works, with examples.

Deemed resident

The day tests aren’t the last word for Indian citizens. An Indian citizen is treated as resident, however few days they spend here, if two things are true in the tax year 2025 Act s. 6(7)-(8)was s. 6(1A):

• their total income, not counting income from foreign sources, is above ₹15 lakh; and
• they aren’t liable to tax in any other country or territory because of their domicile, residence or a similar test.

It applies only if you’re not already resident by days, and it doesn’t apply to people of Indian origin who aren’t citizens.

The rule is aimed at people who have arranged to be taxed nowhere, but it can catch ordinary readers too: someone working in a country without personal income tax, or someone between countries for a year, with a large Indian gain in that year. “Liable to tax” is a defined term: the other country’s income-tax law has to reach you, even if you end up paying nothing or are later exempted. A tax residency certificate shows where you live, not that you’re liable to tax there, so one from a country with no personal income tax doesn’t take you out of the rule.

Like the higher-income visitor rule, deemed residence comes with a soft landing: a deemed resident is always RNOR. Your salary abroad stays outside Indian tax as long as it’s paid to you abroad; the change is that you’re resident for the rest of the Act. Read the deemed-resident guide for who it catches and what “liable to tax” means.

RNOR: the in-between years

Once you’re resident, the next question is whether you’re “ordinarily” resident. You’re not ordinarily resident for the year if any one of these is true 2025 Act s. 6(13)was s. 6(6):

• you were a non-resident in 9 of the previous 10 tax years; or
• you spent 729 days or less in India over the previous 7 tax years; or
• you’re a citizen or person of Indian origin with Indian income above ₹15 lakh who spent at least 120 days but fewer than 182 days in India this year. That clearly covers a visitor caught by the higher-income rule; whether it also covers someone who moved back to live here isn’t settled, so ask a CA; or
• you’re a deemed resident.

The first two are what matter when you move back after years abroad. Because they look back over several years, most people who return after a long spell away are RNOR for their first two or three tax years back, depending on when in the year they arrive. That window is valuable: foreign salary, interest, rent and gains earned while you’re RNOR generally stay outside Indian tax, which gives you time to sell foreign investments, close accounts or draw down a foreign pension.

The window closes on its own once your past years stop qualifying, and you become resident and ordinarily resident. From then, your worldwide income is taxable in India and you report foreign assets every year. Plan the timing of large foreign gains around it. Read RNOR status after you return for what stays tax-free and for how long.

What changes with your status

Your status doesn’t only decide which income is taxed. It changes how tax is collected from you in India, and what you have to report.

Tax deducted at source. Banks, tenants and buyers deduct tax at non-resident rates when they pay an NRI, and the rates are higher than for residents. Interest on an NRO account, for example, has TDS of 30% before surcharge and cess, whatever your real tax rate. Tell your bank when your status changes, in either direction, so it deducts at the right rate from then on. If too much was deducted, the only way to get it back is a refund in your return. TDS on NRO interest explains the rates and the refund.

Selling property. When you sell a flat as a non-resident, the buyer usually deducts tax at the capital-gains rate on the whole price, unless you get a lower-deduction certificate first, rather than the small flat-rate deduction that applies when the seller is resident. The deduction follows your status for the year of the sale, so a sale in the year you come back can be treated very differently from one a year earlier. The full steps are in selling property as a non-resident.

What you report. A non-resident’s return covers Indian income only, and asks how many days you were in India. A resident and ordinarily resident taxpayer reports worldwide income, claims credit for foreign tax, and lists foreign assets: bank accounts, shares, retirement accounts and property abroad, even if they earned nothing. RNOR sits with the non-residents on foreign income, but you still declare your status and your Indian income in full.

Deductions and rebates. Some reliefs in the Act are only for residents, and some rules, such as the option to pay the older property rate with indexation, apply only to resident individuals. When a guide on this site says a rule is for residents, it means your status for that tax year.

Because so much depends on it, work out your status early in the year you move, and again before you file. It’s the first line of your return and the first question a CA will ask.

The year you leave India

The year you move abroad is decided by the same tests as any other year, but the days you spend in India before you leave count in full. If you leave for a job abroad before the midpoint of the tax year, you’ll often be under 182 days and a non-resident for the whole year. As a citizen leaving for employment, the second day test doesn’t apply to you.

Leave later in the year and you’re probably resident for the year of departure, and since you’ve lived in India, ordinarily resident. That means your first months of foreign salary can be taxable in India too, with credit for the foreign tax. It’s the most common surprise in this cluster, and it’s worth checking before you choose a start date.

Your bank accounts are a separate matter: under FEMA they should be switched to NRO from when you leave to take up a job abroad, not from the end of the tax year. Read your status in the year you leave for the timing, the salary split and what to tell your employer.

The year you come back

Coming home works the other way. Return early in the tax year and you’ll likely pass 182 days. Return later and you can still be resident. We treat coming back to live here as not a visit, so the second test applies: 60 days or more this year plus 365 days or more over the previous 4 years is enough. That’s our reading; the Act doesn’t spell out the year you move, so ask a CA if your days fall between the two tests. Only a late return with few earlier visits leaves you a non-resident for the year. Either way, you’ll usually be RNOR, as described above.

In your first return as a resident, the status you tick decides which schedules you complete, and whether your foreign income belongs in the return at all. Keep a clear record of your days abroad in the previous years, because the RNOR tests depend on them. Read your status in the year you come back for the timeline and what to do in the first months.

Working out your status is only the first step. Moving back to India covers the rest of the first-three-years plan: your NRE, NRO and FCNR accounts, foreign retirement accounts, and when you have to start reporting foreign assets.

Tax residency and FEMA residency

The word “NRI” means two different things in India. For income tax, it follows the tests on this page. For FEMA, the foreign-exchange law that decides which bank accounts and investments you can hold, you’re a person resident outside India once you’ve gone abroad for a job, business or with the intention of staying for an uncertain period.

So you can be a non-resident for FEMA and resident for tax in the same year, which is common in the year you leave. The reverse happens in the year you return. Your NRE, NRO and FCNR accounts follow FEMA; your return follows the Income-tax Act. Read FEMA residency versus tax residency for how the two interact.

Resident in two countries

Your country of residence has its own rules, and you can easily be resident in both countries in the year you move. When that happens, the tax treaty between India and that country usually decides where you’re resident for treaty purposes, using a tie-breaker: where you have a permanent home, then where your personal and economic ties are strongest, then where you usually live, then nationality. If you’ve moved to the US for work, our guide to the H-1B dual-residency year works through the overlap day by day.

The treaty doesn’t change your status under Indian law, but it can stop India taxing income the treaty gives to the other country. To claim it, keep the other country’s tax residency certificate as evidence. Once you’re non-resident under Indian law, the Act makes that certificate and Form 41 (was Form 10F) a condition of any treaty relief. See our guides on double taxation and treaty relief for your country.

Keep the evidence together each year: the certificate, your travel record, your lease or home ownership abroad, and where your family and job are. If the tie-breaker is ever questioned, those papers are what decide it, and they’re hard to rebuild years later.