Section 6 Residency Status Criteria (AY 2026-27)
Determining whether an individual qualifies as a Non-Resident Indian (NRI) or Resident but Not Ordinarily Resident (RNOR) is governed by Section 6 of the Income-tax Act, 1961. Use this verified guide to check physical stay rules.
| Residential category | Stay criteria in India (FY) | Taxation impact |
|---|---|---|
| Resident & Ordinarily Resident (ROR) | Stay of 182 days or more in India during the FY, OR stay of 60 days or more in the FY AND 365 days or more in the 4 preceding FYs. | Global income is taxable in India under Section 5. |
| Non-Resident Indian (NRI) | Stay of less than 182 days in India during the FY (and does not meet the 60 days + 365 days test). | Only income received, accrued, or deemed to receive/accrue in India is taxable. |
| Indian Citizen / PIO Visitor Exception | The 60-day threshold is extended to 182 days if Indian-sourced income is up to Rs. 15 Lakh, and to 120 days if Indian-sourced income exceeds Rs. 15 Lakh. | If stay is between 120 and 181 days, they are classified as RNOR. |
| Deemed Resident (Section 6(1A)) | Indian citizen with Indian-sourced income > Rs. 15 Lakh who is not liable to tax in any other country. Automatically RNOR. | Foreign income is not taxable in India. Only Indian-sourced income is taxed. |
What a serious tax expert should verify
- Physical stay day-wise log based on passport entry and exit stamps (both arrival and departure days count as full days).
- Financial Year basis: Days of stay must be calculated on a Financial Year basis (April 1 to March 31) and not the Calendar Year.
- RNOR (Resident but Not Ordinarily Resident) benefits: Active if non-resident in 9 out of 10 preceding years, OR stay in India <= 729 days in 7 preceding years.
- Transition under Income Tax Act, 2025: Verify if new definitions affect Tax Year 2026-27 stay requirements.
Documents to prepare for verification
- Passport (all pages with entry/exit stamps for the last 5 financial years).
- FCCS / residency proof in the foreign country.
- Annual Information Statement (AIS) and Form 26AS to track Indian income transactions.
- Detailed day count excel sheet reconciling passport stamps.
NRI Residential Status Determination: year and source check
Last fact-checked: 18 June 2026.
AY 2026-27 means FY 2025-26 income and is filed under the Income-tax Act, 1961. Tax Year 2026-27 means FY 2026-27 income under the Income Tax Act, 2025. Do not mix the two.
Verify stay days, TRC validity, DTAA rates, NRO interest, and Form 15CA/15CB requirements against official CBDT guidelines, notifications, and portal utilities before taking a filing position.
FAQs
How is the number of days of stay in India calculated?
The calculation is based on actual physical stay in India during the financial year (April 1 to March 31). Both the day of arrival and day of departure in India are counted as full days of stay.
What is the deemed residency rule under Section 6(1A)?
Introduced in the Finance Act, an Indian citizen is deemed a resident of India if their Indian-sourced income exceeds Rs. 15 Lakh and they are not liable to tax in any other country by reason of domicile, residence or similar criteria. They are classified as RNOR.
Is global income taxable for an RNOR in India?
No. Resident but Not Ordinarily Resident (RNOR) individuals are taxed in India only on Indian-sourced income (received or accrued in India) and income from a business controlled or profession set up in India. Their foreign-sourced income is exempt.
Frequently Asked Questions
1. How do DTAA provisions and NRI tax compliance apply to income from NRI Residential Status Determination?
Under Double Taxation Avoidance Agreements (DTAA), NRIs can claim lower withholding tax (TDS) rates on income from NRI Residential Status Determination by submitting a Tax Residency Certificate (TRC) and Form 10F online.
2. What are the reporting requirements for residents holding foreign assets related to NRI Residential Status Determination?
Resident taxpayers holding foreign shares, bank accounts, or investments related to NRI Residential Status Determination must disclose them in Schedule FA (Foreign Assets) of their ITR to avoid heavy Black Money Act penalties.
3. What is the Double Taxation Avoidance Agreement (DTAA)?
DTAA is a bilateral treaty signed between India and a foreign country to prevent double taxation of the same income in both countries by capping withholding tax rates or providing tax credits.
4. What documents are mandatory to claim DTAA treaty benefits?
Taxpayers must submit: (1) A Tax Residency Certificate (TRC) issued by the tax authority of their country of residence. (2) Form 10F filled out online. (3) A valid Indian PAN.
5. Is interest earned on NRE and NRO accounts taxable?
Interest earned on NRE (Non-Resident External) and FCNB accounts is fully tax-free in India. Interest earned on NRO (Non-Resident Ordinary) accounts is taxable at your slab rate, and subject to 30% TDS.
6. How does Form 10F work, and how is it filed?
Form 10F is a self-declaration filed by non-residents containing details like nationality, tax identification number, and address. It must be filed online on the Income Tax e-filing portal using a digital signature or net banking verification.
7. What is the TDS rate on payments made to NRIs?
TDS on payments to NRIs is governed by Section 195. It is deducted at the maximum rate applicable to the type of income (e.g. 30% on rent/NRO interest, 12.5% on long-term capital gains, 20% on dividends), subject to lower rates under DTAA.
8. Can an NRI claim the Section 87A tax rebate?
No. The Section 87A rebate (which makes tax zero up to ₹12 lakh under the New Regime) is only available to resident individuals. NRIs do not qualify for this rebate and must pay tax on taxable income exceeding basic limits.
9. Which ITR form should an NRI file for FY 2025-26?
NRIs must file ITR-2 (for capital gains, salary, or property income) or ITR-3 (if they have business/professional income). NRIs cannot file ITR-1 (Sahaj).
10. Do NRIs need to declare foreign bank accounts in their Indian ITR?
No. NRIs do not need to report foreign bank accounts, foreign stocks, or assets in Schedule FA. Only resident taxpayers are mandatory to report foreign assets.
11. What is Schedule FA and who must file it?
Schedule FA (Foreign Assets) is a mandatory schedule in ITR-2/ITR-3 for resident taxpayers. It requires reporting details of all foreign assets (shares, mutual funds, bank accounts, property) held at any time during the calendar year.
12. What is the penalty for failing to file Schedule FA?
Under the Black Money Act, resident taxpayers who fail to disclose foreign assets in Schedule FA or underreport value face a flat penalty of ₹10 lakh per year, plus interest and potential prosecution.
13. How do I claim Foreign Tax Credit (FTC) in India?
To claim credit for taxes paid in a foreign country on double-taxed income, you must file Form 67 online on the e-filing portal along with proof of tax payment/withholding before filing your ITR.
14. Are capital gains on Indian mutual funds taxable for NRIs?
Yes, capital gains are taxable for NRIs. Equity LTCG is taxed at 12.5% (>12 months), STCG at 20%. Debt mutual fund gains are taxed at slab rates. The fund house will deduct TDS on redemptions.
15. Can an NRI buy agricultural land in India?
Under FEMA regulations, an NRI or OCI cannot purchase agricultural land, plantation property, or farmhouse in India. They can, however, inherit such properties or buy commercial/residential properties.