Indians living abroad must track their stay in India, domestic income and overseas tax status to determine residency and income-tax filing obligations under the law effective from April 2026
India’s Income-tax Act, 2025, which came into force on April 1, 2026, retains the existing rules for determining the tax residency of non-resident Indians (NRIs), including the 182-day stay test and special provisions linked to annual Indian income exceeding ₹15 lakh.
The Income Tax Department has confirmed that the basic residency conditions remain unchanged under the new legislation. Indians living overseas should therefore continue to monitor their time in India and the nature of their income to establish their tax status for each financial year. https://www.incometax.gov.in/iec/foportal/help/all-topics/e-filing-services/non-resident
Under the general rule, an individual is considered a resident for tax purposes if they spend at least 182 days in India during the relevant tax year. Residency can also arise if a person stays for at least 60 days in the year and has spent 365 days or more in India during the preceding four years, subject to specific exceptions.
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Indian citizens leaving the country for employment abroad, or travelling as crew members of Indian ships, receive a relaxation
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For them, the general 60-day test does not apply, and the 182-day threshold determines residency.
₹15 lakh income threshold
Special conditions apply to Indian citizens and persons of Indian origin visiting India. If their income other than income from foreign sources exceeds ₹15 lakh in a tax year, the alternative residency test can apply when their stay reaches 120 days, provided they have also spent at least 365 days in India during the preceding four years.
The law also retains the concept of deemed residency. An Indian citizen whose income, excluding foreign-source income, exceeds ₹15 lakh may be treated as a resident if they are not liable to tax in another country because of domicile, residence or similar criteria. This provision applies irrespective of the number of days spent in India.
When must NRIs file returns?
Tax residency and the obligation to file an income-tax return are separate questions. Under Section 115G of the earlier Income-tax Act, 1961, eligible NRIs could claim an exemption from filing a return where their income consisted solely of specified investment income or long-term capital gains, subject to applicable conditions, including tax deducted at source.
The new legislation retains the existing framework for determining residency, but individuals should check the applicable return-filing provisions before claiming an exemption.
Residential status is assessed separately for each tax year. For 2025-26, the 1961 Act applies; for 2026-27 onwards, the 2025 Act governs the assessment of residency.
Tax experts advise NRIs to maintain accurate travel records, review income earned in India and overseas, and seek professional advice where residency or filing obligations are unclear.
