Summary: Section 6 of the Income-tax Act, 2025 determines an individual’s Indian tax residency primarily through the number of days spent in India. For a person leaving India for employment outside India, the relevant threshold discussed is 182 days. The article explains the distinction between Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (RNOR), and Non-Resident (NR), and shows how residential status affects taxation of Indian and foreign-source income. It illustrates how a 17-day difference in departure dates can result in a substantial difference in Indian tax liability where UAE employment income is involved. The article also discusses the India-UAE treaty, UAE treaty residency, tie-breaker considerations, foreign tax credit, and practical steps before relocating, including maintaining evidence of travel, monitoring return visits and considering FEMA-related bank-account changes. The article concludes that day-count planning before relocation is critical for determining Indian tax residency and the resulting taxation of foreign salary.
Rule one: India counts days, not intentions
Under Section 6 of the Income-tax Act, 2025, an individual is a Resident of India in a tax year if either:
- He is in India for 182 days or more during the tax year; or
- He is in India for 60 days or more in the tax year and 365 days or more in the four preceding tax years.
There is a concession that matters enormously here. If you leave India for the purposes of employment outside India, the 60-day condition in the second test is relaxed to 182 days. So for someone taking up a genuine overseas job, the whole question collapses to one number: were you in India for 182 days or more?
Note that “in India” includes the day you arrive and the day you leave. Both are counted. So are your holidays back home, your sister’s wedding, and the fortnight you spent in Delhi working remotely.
Rule two: Resident is not the end of it — ROR vs RNOR
If you are a Resident, Section 6 then asks whether you are Ordinarily Resident. You are Resident but Not Ordinarily Resident (RNOR) if you were a non-resident in India in at least nine of the ten preceding tax years, or you were in India for 729 days or less in the seven preceding tax years.
The distinction is the whole ballgame:
What India taxes, by residential status
| Status | Indian-source income | Foreign-source income | Schedule FA disclosure |
|---|---|---|---|
| Resident and Ordinarily Resident (ROR) | Taxed | Taxed — global income | Required |
| Resident but Not Ordinarily Resident (RNOR) | Taxed | Not taxed, unless from a business controlled from India | Not required |
| Non-Resident (NR) | Taxed | Not taxed | Not required |
Income deemed to accrue or arise in India under Section 9 is taxable for all three categories.
Someone who has lived in India all his life and leaves in October is a Resident and Ordinarily Resident for that year. Global income. Including the Dubai salary.
The 17 days that decide INR 9 lakh
Take Arjun. He earned INR 2,00,000 a month in India and moved to a UAE role paying the equivalent of INR 6,00,000 a month. Two versions of the same move:
Arjun’s Tax Year 2026-27 (1 April 2026 to 31 March 2027) — two departure dates
| Scenario A: leaves 15 October 2026 | Scenario B: leaves 28 September 2026 | |
|---|---|---|
| Days in India in the tax year | 198 days | 181 days |
| Residential status (Sec 6) | Resident & Ordinarily Resident | Non-Resident |
| Indian salary in the year | INR 13,00,000 | INR 12,00,000 |
| UAE salary in the year | INR 33,00,000 — taxable in India | INR 33,00,000 — not taxable in India |
| Taxable income after INR 75,000 standard deduction | INR 45,25,000 | INR 11,25,000 |
| Tax on slabs (Section 202, new regime) | INR 9,37,500 | INR 52,500 |
| Health & education cess at 4% | INR 37,500 | INR 2,100 |
| Total Indian tax | INR 9,75,000 | INR 54,600 |
Difference: INR 9,20,400 — on a decision that turned on 17 days of departure date.
Arjun in Scenario A is not being punished. He is simply a tax resident of India for that year, and India taxes residents on worldwide income. It is a perfectly ordinary rule that he collided with because nobody counted his days before he booked the flight.
“But surely the India–UAE treaty protects me?”
This is the hope everyone clings to, and it usually fails on the facts.
A tax treaty tie-breaker (Article 4 of most Indian DTAAs) only engages if you are a resident of both countries under their respective domestic laws. Under the India–UAE agreement, an individual generally has to be present in the UAE for at least 183 days to be treated as a UAE resident for treaty purposes.
Arjun in Scenario A was in the UAE for about 166 days in the Indian tax year. He is not a UAE treaty resident. There is no dual residency, so there is nothing to break the tie. India taxes the full amount.
And even where the tie-breaker does apply, it runs in a fixed order: permanent home available to you → centre of vital interests → habitual abode → nationality → mutual agreement between the two competent authorities. Keeping a flat in Mumbai that stands empty for your visits is a “permanent home available to you”. That alone can decide the case against you.
The final sting: the UAE levies no personal income tax. So even if India taxes the salary, there is no foreign tax to credit under Section 159 or Section 160. Foreign Tax Credit relieves double taxation; it cannot relieve single taxation in a zero-tax jurisdiction.
The practical checklist before you relocate
1. Count the days first, book the ticket second. Aim to be out of India before you cross 182 days in the tax year. If you cannot, consider whether the move can be structured to start in the following tax year altogether.
2. Keep evidence of the day count. Passport entry and exit stamps, boarding passes, visa and residence permit dates. The burden is on you.
3. Watch the return trips. Two long visits home in February and March have flipped more than one client from Non-Resident to Resident in the final weeks of a tax year.
4. Get a UAE (or other host country) TRC for the following year, when you will qualify. It costs little and settles a lot of arguments.
5. Convert your Indian bank accounts to NRO/NRE status once you are a non-resident under FEMA. Note that FEMA residency and income-tax residency are different tests with different triggers — do not assume one follows the other.
6. Plan the year you come back too. On return, you will usually qualify as RNOR for two, sometimes three, tax years. During that window your foreign income and foreign assets stay outside the Indian net. That is a valuable, time-limited shelter for closing out overseas investments — and most people waste it because they did not know it existed.
The bottom line
Indian tax residency is arithmetic, not narrative. It will not be moved by how permanent your relocation feels or how sincerely you have left. Work out your day count before the move, not in July when you sit down to file. For a Tax Year 2026-27 relocation, the 182nd day falls at the end of September 2026 — which means the decision is being made right now, not at filing time. In a genuine relocation year, that single calculation is worth more than any deduction you will ever claim.
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About the Author: CA Sonia Dawar is a practicing Chartered Accountant and the founder of Dawar & Co. A large part of her practice involves residency planning for Indians moving abroad and NRIs returning home — determining status under Section 6, applying treaty tie-breaker rules, and structuring the year of transition so clients do not pay avoidable tax on foreign salary. Reach her at [email protected] or dawarandco.com.
