Finance Minister Nirmala Sitharaman will present the Union Budget 2026 on February 1, and NRIs will be closely watching whether this long-standing demand finds a place in the proposals
As the Union Budget 2026 approaches, tax experts have called on the government to simplify India’s residency rules for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs).
The Bombay Chambers of Commerce and Industry (BCCI) has suggested restoring the earlier 182-day residency rule, saying the current framework has created confusion and unintended consequences.
Before the Finance Act 2020, NRIs and PIOs visiting India were treated as non-residents if they stayed in the country for less than 182 days in a financial year. Even if their total stay over the previous four years exceeded 365 days, they were not taxed in India on their foreign income. This rule was simple and easy to follow.
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The Finance Act 2020 introduced a more complex system
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Under the revised rules, visiting NRIs and PIOs are treated as non-residents only if their stay is below 120 days
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An exception applies if their India-sourced income is under ₹15 lakh, in which case the old 182-day limit continues
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If their income exceeds ₹15 lakh and their stay is between 120 and 182 days, they fall under the category of “not ordinarily resident”
According to BCCI, this graded system has made compliance harder. NRIs now need to track not just their days in India, but also their income levels and travel history over several years. This has led to uncertainty and frequent tax disputes.
Experts argue that bringing back the 182-day rule without income conditions would encourage NRIs and PIOs to spend more time in India, boosting tourism, hospitality and local spending. It would also make tax rules easier to understand and administer.
They warn that the lower 120-day limit may push NRIs to shorten visits, reduce investments, or restructure income to avoid higher tax exposure. In many cases, the policy has not achieved its intended goal, as individuals can still avoid residency by limiting their stay.
