Can staying in India for as little as four months alter one's international income tax liability?
Indeed it can—and beginning in April of 2026, rules governing that transition become more detailed.
India's Income Tax Bill 2025 introduces sweeping reforms relating to the classification of Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) for tax purposes. The aim is to modernize the residency rule and close possible loopholes that were hitherto exploited, particularly by high-income individuals residing in tax-exempting locations
If you belong to one of these groups, it is necessary to acquaint yourself with the new NRI tax residency rules to remain compliant and to avoid unintended taxation of your overseas income.
Before jumping into the rulebook, it is important to know why and how India measures tax liabilities. Unlike most countries that consider citizenship, India charges tax on individuals according to financial year residency status.
This is
The one rule that remains at the center of India's residency regime, despite several changes, is as follows: you become a resident if you are physically in India for 182 days or more within an accounting year running from April to March. This is universally applicable and stands identical to the previous Income-tax Act, 1961.
The individuals who reside for not more than 182 days will remain to be treated as NRIs subject to no other regulation taking precedence.
In the past, one would need to be staying at least 60 days in one financial year and 365 days within the last four years to be classified as a resident. Although this rule is still in place, not everyone is caught within its scope.
That is to say, merely traveling to India for 100 days no longer alters your residency status—provided you don't cross an income threshold.
A new 120-day rule has been added to strengthen tax compliance among high-income earning NRIs and PIOs. This rule is applicable if your income from India is more than ₹15 lakh in a financial year.
Here’s how it works:
Conditions Met
Residency Status
Stay ≥ 182 days
Resident (ROR)
Stay 120–181 days + 365 days in past 4 years + Indian income > ₹15 lakh
Resident but Not Ordinarily Resident (RNOR)
Stay < 120 days OR income ≤ ₹15 lakh
Non-Resident (NRI)
The addition also fills an old loophole where rich individuals evaded Indian taxes by restricting visits.
The Resident but Not Ordinarily Resident (RNOR) status is significant in helping to protect international income from tax while acknowledging Indian presence and income.
You qualify as an RNOR if
As an RNOR, your income from India is taxable, but your foreign income is outside India's taxing jurisdiction—provided that it is not managed and controlled from India.
One of the most contentious additions to the new framework is the deemed residency clause which covers Indian nationals who:
Such persons will be counted as Indian residents, irrespective of whether or not they physically come to India. This directly aims at persons residing in tax havens like the UAE, Monaco, or Saudi Arabia, where income tax is zero or negligible.
If you’re staying in such a nation and don’t organize your earnings well, you may be taxed in India globally even when you’re not there.
India does not tax international income unless you are a full resident, though there are exceptions when an international income is brought into tax even if one is an RNOR.
The following foreign income can be taxed:
That is not sufficient to open up a company overseas. If decisions or control reside in India, your earnings can be subject to taxation.
The Income Tax Bill 2025 has implications not only for individuals but also for firms, HUFs, companies, as well as trusts.
To not become an unintentional tax resident, high-income NRIs ought to:
With NRI tax residency rules becoming more stringent, an incidental trip back home or an increase in Indian income can today expose you to global taxation. The new regime focuses not only on where you physically are, but also where you earn, control, and pay tax on your income. In future, each NRI needs to be re-examining his or her history of travels, means of earning, and financial structure of control periodically.
This is not merely about tax saving—it’s about being compliant, penalty-free, and safeguarding your international wealth. If you were assuming that you could evade paying tax by staying fewer days in India, you need to rethink your plan.