Section 6 of Income-tax Act, 2025: Residential Status, ROR, RNOR and NRI Rules

Summary: Section 6 of the Income-tax Act, 2025 determines whether an individual or another taxable person qualifies as resident or non-resident in India and, where applicable, whether a resident individual is ordinarily resident (ROR) or resident but not ordinarily resident (RNOR). Applicable from tax year 2026–27, the provision reorganises the residential-status rules previously contained in Section 6 of the Income-tax Act, 1961. The principal tests for individuals continue to depend on physical presence in India for 182 days during the relevant tax year or 60 days during that year together with 365 days in the preceding four years, subject to special exceptions. Indian citizens leaving India for employment or qualifying ship employment, and Indian citizens or persons of Indian origin visiting India, are subject to modified conditions. For certain visiting individuals whose relevant income exceeds ₹15 lakh, the 120-day threshold becomes important. The provision also addresses deemed residence of Indian citizens who satisfy specified income and foreign tax-liability conditions. Residents must separately establish whether they qualify as ordinarily resident, considering residence in at least two of the preceding ten years and physical presence of 730 days during the preceding seven years. The article explains these requirements through practical illustrations, compares the provisions of the 1961 and 2025 Acts, and examines how residential classification affects the taxation of Indian and foreign income. It also discusses the importance of maintaining reliable travel records and applying the relevant rules for each tax year.

Section 6 of the Income-tax Act, 2025: Residential Status, Step by Step

Before you work out tax for an individual, you have to answer one question. Is the person a resident, a resident but not ordinarily resident (RNOR), or a non-resident? The answer decides which income India can tax.

Section 6 of the Income-tax Act, 2025 gives the tests. They are the same as before: 182 days, or 60 days plus 365 days. What changed is the layout. Special rules that sat inside the Explanations to Section 6(1) now have their own sub-sections, and “Previous Year” is now “Tax Year”.

One timing point. Section 6 of the 2025 Act applies from tax year 2026-27. For 2025-26, residence is still decided under the 1961 Act, even if a stay runs across March 2026.

Old Section vs New Section

Two Questions, in Order

For an individual there are two questions, in this order. First, is the person resident? Second, if resident, is the person ordinarily resident (ROR) or not (RNOR)?

The two day tests in step 1 are alternatives. Meeting either one is enough.

Suresh is in India for 183 days. He passes the first test, so he is resident. Kavita is here for only 62 days this year, but she spent 410 days here in the last four years. She passes the second test, so she is resident too. Vikram is here for 75 days, and was here for 340 days in the last four years. He fails both tests, so he is a non-resident.

Counting the Days

Arrival and departure days may create disputes in computing physical presence. The treatment of part-days can depend on the facts and applicable judicial interpretation; do not assume that every case follows an identical counting approach.

Special Rules for Indian Citizens

Some Indian citizens get special rules. They change which day test applies.

Leaving for work, or as crew of an Indian ship (Section 6(3)). The 60-and-365 test is ignored. Only the 182-day test applies. Take Nikhil, who leaves for a job in Singapore in July after 112 days in India that year. He had spent more than 365 days here in the last four years, but that no longer matters. With 112 days, he is a non-resident for the year.

Visiting India (Sections 6(4) and 6(5)). This covers an Indian citizen, or a person of Indian origin, who lives abroad and comes on a visit. A person of Indian origin is someone who, or whose parent or grandparent, was born in undivided India. The 60-and-365 test is ignored here too. But if the visitor’s total income other than income from foreign sources is above ₹15 lakh, the test comes back, with 120 days in place of 60.

Here is the result for a visiting citizen or person of Indian origin:

“Income from foreign sources” under Section 6(14) means income accruing or arising outside India, excluding income derived from a business controlled in India or a profession set up in India, and excluding income deemed to accrue or arise in India. This definition is relevant when applying the ₹15 lakh income threshold.

Take Anita, a citizen settled in the UAE. She visits India for 140 days. She has ₹21 lakh of Indian rent and interest, and a ₹35 lakh salary in the UAE. Only the ₹21 lakh counts toward the ₹15 lakh. If she was in India for 365 days or more in the last four years, she is resident this year, but only as RNOR. With just

₹12 lakh of Indian income, the 120-day rule would not apply, and she would be a non-resident.

The ₹15 lakh condition is not a residence test on its own. It only decides which day count applies to a visitor.

For an eligible international voyage, Rule 8 of the Income-tax Rules, 2026 excludes from the stay-in-India calculation the period between the joining and signing-off dates recorded in the Continuous Discharge Certificate, subject to the rule’s conditions.

Deemed Residents

An Indian citizen can be treated as resident even with very few days in India. This is deemed residence (Section 6(7)). All three conditions must be true:

1. the individual is an Indian citizen;
2. total income other than income from foreign sources is above ₹15 lakh; and
3. the individual is not liable to tax in any other country or territory because of domicile, residence or a similar criterion.

The rule does not apply to someone who is already resident under Sections 6(2) to 6(6) (Section 6(8)). A deemed resident is always RNOR.

Example: Rajan is an Indian citizen who lives in a country with no income tax. His Indian rent is ₹19 lakh, and he spends 35 days in India. He is deemed resident, and RNOR. Had he been liable to tax in that country, Section 6(7) would not apply.

Ordinarily Resident or Not?

Once a person is resident, check two more conditions (Section 6(13)). The person is ROR only if both are met:

• resident in at least 2 of the last 10 tax years; and
• in India for 730 days or more in the last 7 tax years.

Fail either one, and the person is RNOR. Two groups are RNOR whatever their history: a visiting citizen or person of Indian origin who is resident only under the 120-day rule, and a deemed resident. For a HUF, the two conditions are applied to its karta.

Meena returns to India after 12 years in the UK and stays for 210 days. She is resident this year under the first test. But she was not resident in any of the last 10 years, so she fails the first condition and is RNOR.

Example: Tom, an Australian cricket coach, has come to India for 100 days every year since 2010-11. He is not an Indian citizen or a person of Indian origin, so the special rules above do not apply. Only the ordinary tests do.

• Resident or not? 100 days is more than 60, and the last four years add up to 400 days (4 × 100). He passes the second test, so he is resident.
• ROR or RNOR? He has been resident in well over 2 of the last 10 years, so the first condition is met. But in the last 7 years he was in India for only 700 days, which is short of 730. The second condition fails, so he is RNOR.
• What if it were 110 days a year? The last 7 years would add up to 770 days. Both conditions are met, so he becomes ROR. Ten extra days a year change the answer.

Four Quick Cases

Try these before reading the answers. Dates are shown as day counts, and every case is tested under the ordinary rules first.

1. A first visit that falls short. Mark, an American, comes to India for the first time on 10 October and leaves the following 5 July. In the tax year he arrives, he is here from 10 October to 31 March, which is 173 days. He has no earlier stay in India, so the second test cannot help. He is a non-resident.
2. 181 days, two years running. Sarah, also from the US, arrives on 2 October and leaves on 28 September of the next year. From 2 October to 31 March is 181 days, one short of 182. In the next tax year she is here from 1 April to 28 September, which is again 181 days. The second test needs 365 days in the last four years, and she has only 181. She is a non-resident in both years. One more day in the first year would have changed the result.
3. Left for a job, then came back on a visit. Ravi, an Indian citizen, leaves for a job in Germany on 20 September. In that year he was in India for 173 days (1 April to 20 September), so he is a non-resident under Section 6(3). Next year he comes back for 150 days. Now he is a citizen living abroad on a visit, so Sections 6(4) and 6(5) apply. His German salary is foreign-source income and does not count toward the ₹15 lakh. With Indian income below ₹15 lakh, only the 182-day test applies, and 150 days falls short. He is a non-resident again.
4. Born in Lahore, living in England. Mr Gill was born in Lahore in 1946 and has lived in England since 1970. He visits India on 2 October and returns on 30 March. That is 180 days, which is less than

182. He is a person of Indian origin because he was born in undivided India, so the visitor rule applies. Even if his Indian income were above ₹15 lakh, the 120-day rule also needs 365 days in India in the last four years, and he has none. He is a non-resident.

Which Income Is Taxable?

The status decides how much of a person’s income India can tax. The table follows Section 5.

Three points to remember:

• Income received in India is taxable for all three statuses, wherever it was earned. Income that accrued abroad is not treated as received in India only because it shows in a balance sheet prepared in India (Section 5(3)).
• What matters is where income is first received. If foreign income is first received in a bank account abroad, moving that money later to an Indian account is not a receipt in India, so it is not taxed again on that ground.
• Income already taxed as accrued is not taxed again as received (Section 5(4)).

Take ₹5 lakh of interest from a UK bank, received in the UK. It is taxable for an ROR. It is outside the net for an RNOR and for a non-resident. If the same interest were received in India, it would be taxable for all three.

“Taxable” here means inside the scope of total income. Exemptions and treaty relief can still reduce the tax.

HUFs, Firms, AOPs and Other Persons

For these, days do not matter. A HUF, firm, AOP, BOI, local authority or artificial juridical person is resident unless the control and management of its affairs is wholly outside India in that tax year (Sections 6(9) and 6(11)). If any part of it is in India, the person is resident.

Example: A HUF’s karta lives in the UK. But the family’s rental business in Jaipur is run day to day by another family member, who takes the key decisions there. Control and management are not wholly outside India, so the HUF is resident. It is ROR if the karta passes both conditions above, and RNOR if not.

Only individuals and HUFs can be RNOR. A firm, AOP, company or any other person is either resident or non-resident.

Companies

An Indian company is always resident. A foreign company is resident only if its place of effective management (POEM) is in India in that tax year (Section 6(10)). POEM is the place where the key management and commercial decisions for running the business as a whole are, in substance, made. The place of incorporation, or an office address, does not decide it.

For example, a company incorporated in Mauritius, whose directors in Mumbai take all the key decisions, can be resident here.

CBDT guidance issued under the 1961 Act provides historical interpretative context for POEM, including the ₹50 crore turnover or gross-receipts threshold and the treatment of companies with active business outside India. However, its current legal applicability under the 2025 Act, including any corresponding directions or transitional provisions, should be confirmed before relying on those administrative concessions.

One Source, All Sources

Under Section 6(12), a person who is resident for any one source of income in a tax year is resident for every other source in that year. You cannot be resident for your salary and non-resident for your business.

Where It Goes Wrong

• Counting days and stopping there. For a citizen who left for work, or a visitor, a special rule can change which test applies.
• Counting foreign income toward ₹15 lakh. Only income other than foreign-source income counts.
• Assuming deemed residence taxes everything. A deemed resident is RNOR, so foreign income is generally outside the net.
• Testing a company by where it was incorporated. For a foreign company, the question is where it is effectively managed.
• Using the wrong Act. Tax year 2025-26 still falls under the 1961 Act.

What I Would Check

1. Which tax year is it, and which Act applies?
2. How many days were you in India this year, and over the last four years?
3. Are you an Indian citizen or person of Indian origin, and did you leave for work or come as a visitor?
4. What is your income other than from foreign sources, against ₹15 lakh? Are you taxed in any other country?
5. If resident, ROR or RNOR. For a HUF, look at the karta.
6. For a firm or company, where are control and key decisions really made?
7. Do your travel records support the day count?

Disclaimer: This article is for general education and information only. Residential status depends on your own facts and the rules for the relevant Tax Year. It is not tax or legal advice.

Official Sources

1. Income-tax Act, 2025 — Section 6 (Income Tax Department)
2. Income-tax Rules, 2026 — Rule 8 (Income Tax Department)
3. Income Tax Department — Non-Resident FAQs