When can an NRI become a deemed resident of India for income tax?

Indian law reviewed as at 29 October 2026.

An Indian citizen living abroad can become a deemed resident of India for income-tax purposes even without spending 182 days, 120 days or any days in India during the relevant year.

But citizenship alone does not make this happen.

The deemed-residence provision applies where an Indian citizen has total income exceeding ₹15 lakh after excluding income from foreign sources as defined in the Act, and is not liable to tax in any other country or territory by reason of domicile, residence or similar criteria. It applies only where the individual is not already resident under the ordinary Indian residence tests.

A person deemed resident under this provision is expressly classified as Resident but Not Ordinarily Resident (RNOR).

That does not automatically make every overseas salary, investment return or bank balance taxable in India.

What does deemed Indian tax residence mean?

Indian income-tax residence is ordinarily determined by physical presence in India, subject to specific statutory conditions and exceptions.

Deemed residence provides another route.

It allows Indian income-tax law to treat a qualifying Indian citizen as resident even where the normal physical-presence conditions have not been satisfied.

The provision was introduced under section 6(1A) of the Income-tax Act, 1961, with effect from assessment year 2021-22.

For tax years beginning on or after 1 April 2026, the corresponding provision is section 6(7) of the Income-tax Act, 2025.

The rule concerns a specific combination of citizenship, income and foreign tax liability. It does not declare every Indian citizen working in a country without general personal income tax to be an Indian tax resident.

Nor does owning property or maintaining bank accounts in India automatically establish deemed residence.

The conditions must be examined separately for the relevant year.

Who can become a deemed resident of India?

Three substantive conditions must be satisfied. In addition, the individual must not already be resident under the ordinary Indian residence tests.

Condition	Statutory requirement
Citizenship	The individual must be an Indian citizen.
Income	Total income, excluding income from foreign sources as defined in the Act, must exceed ₹15 lakh.
Foreign tax liability	The individual must not be liable to tax in any other country or territory because of domicile, residence or similar criteria.

These are cumulative conditions.

If even one necessary condition is not satisfied, deemed residence under this provision does not arise.

Does deemed residence apply to OCI cardholders?

An Overseas Citizen of India (OCI) cardholder who is a foreign citizen does not qualify merely because of OCI status or Indian ancestry.

The deemed-residence provision specifically requires Indian citizenship.

This is different from the rules concerning Indian citizens and persons of Indian origin who visit India.

For the visiting-person provisions, an individual must independently satisfy the applicable statutory definition of a person of Indian origin. Under section 2(78) of the Income-tax Act, 2025, that definition refers to an individual whose own birth, or the birth of either parent or any grandparent, was in undivided India.

OCI status and the income-tax definition of a person of Indian origin should not be treated as automatically interchangeable.

Citizenship, OCI status, person-of-Indian-origin status and income-tax residence are distinct classifications.

Can you become a deemed resident without visiting India?

Yes.

The deemed-residence provision does not prescribe a minimum period of physical presence in India.

An Indian citizen who spends the entire year abroad may nevertheless satisfy the provision if the income and foreign tax-liability conditions are met.

Equally, staying outside India throughout the year does not, by itself, make the person a deemed resident.

How does the ₹15 lakh income condition work?

The statutory threshold is more than ₹15 lakh.

An amount of exactly ₹15 lakh does not satisfy this condition.

More importantly, the law does not use the total amount deposited into Indian bank accounts or the total value of Indian assets.

It refers to total income after excluding income from foreign sources as specially defined under the relevant Act.

Section 6(14) of the Income-tax Act, 2025 defines income from foreign sources, for the purposes of section 6, by reference to income accruing or arising outside India. The definition excludes income derived from a business controlled in India or a profession set up in India, and does not include income deemed to accrue or arise in India.

A corresponding definition appears in section 6 of the 1961 Act.

This creates important differences between types of income and receipts.

For example:

• Rental income from Indian property must be computed under the relevant income-tax provisions.
• Indian property-sale proceeds are not automatically equal to taxable capital gains.
• Salary from employment performed abroad may have a different source and receipt character.
• Overseas business income may require examination of where the business is controlled.

Suppose an Indian citizen sells a property in India for ₹80 lakh.

That does not automatically establish ₹80 lakh of total income for the deemed-residence threshold. The applicable capital-gains computation and other relevant statutory provisions must be considered.

The same caution applies to maturity proceeds, bank transfers and investment redemptions.

The amount moving through a bank account is not necessarily the amount of income used for the ₹15 lakh test.

What does “not liable to tax in another country” mean?

This is one of the most important conditions.

There is a legal difference between being liable to income tax in another country and actually paying income tax there.

Section 2(29A) of the Income-tax Act, 1961 and section 2(66) of the Income-tax Act, 2025 define “liable to tax” with reference to income-tax liability under the law of the relevant country. The definition also includes a person subsequently exempted from that liability under that country’s law.

Therefore, paying no foreign income tax does not necessarily mean that a person is not liable to tax.

But the deemed-residence provision imposes an additional requirement.

The relevant foreign tax liability must arise by reason of domicile, residence or similar criteria.

Tax imposed only because a particular income arises in a country does not automatically establish liability to tax there on the specified residence-related basis.

The distinction is between:

• Whether foreign law imposes an income-tax liability.
• The legal reason that liability arises.
• Whether an exemption or other provision results in no tax being payable.

A nil tax payment, a foreign residence permit or a tax-residence certificate may provide useful evidence. None should automatically be treated as a complete answer to the Indian statutory condition.

Does living in the UAE, for example in Dubai, make an Indian citizen a deemed resident?

Not automatically.

Consider an Indian citizen who lives and works in Dubai, holds a UAE residence visa and pays no personal income tax on employment salary.

Those facts alone do not determine Indian deemed residence.

The individual’s citizenship and whether the statutory ₹15 lakh income condition is satisfied must first be established. The foreign liability-to-tax condition must then be examined.

The UAE presents a further distinction.

Under UAE Federal Tax Authority guidance, Corporate Tax can apply to natural persons conducting business or business activities in the UAE where the relevant turnover threshold and other conditions are satisfied.

That business-based liability is not automatically equivalent to being liable to tax because of domicile, residence or similar criteria.

The legal basis of the liability matters.

There is also a separate treaty question.

Article 4 of the India-UAE Double Taxation Avoidance Agreement (DTAA) contains its own residence conditions, including a specific physical-presence test for individuals in the UAE.

Consequently, UAE domestic tax residence, treaty residence under Article 4 and the foreign liability-to-tax condition under India’s deemed-residence provision must be examined separately.

A UAE residence visa does not, by itself, settle all three questions.

The correct foreign-law position must be determined under applicable UAE law. Where the individual’s circumstances require a UAE legal or tax conclusion, that issue should be reviewed by a qualified professional in the UAE.

Is deemed residence the same as the 120-day rule?

No.

The 120-day visiting-person rule and deemed residence are different statutory mechanisms.

The visiting-person rule concerns eligible Indian citizens and persons of Indian origin who come to India during the relevant year.

Broadly, where the statutory income condition is met, residence may arise if the person spends at least 120 days in India during that year and at least 365 days during the preceding four years.

Deemed residence instead applies to an Indian citizen who meets its special income and foreign tax-liability conditions, without requiring a minimum Indian stay.

Question	120-day visiting-person rule	Deemed residence
Applies to Indian citizens?	Yes, where conditions are met	Yes
Applies to eligible persons of Indian origin who are not Indian citizens?	Yes	No
Requires physical presence in India?	Yes	No minimum stay
Has an income threshold exceeding ₹15 lakh?	Yes	Yes
Requires the foreign liability-to-tax test?	No	Yes
May result in RNOR classification?	Yes, within the statutory conditions	Yes, expressly

The ordinary 182-day test and the other applicable residence tests must also be considered.

The order matters. If the individual is already resident under the ordinary rules, the deemed-residence provision does not apply.

Does a deemed resident become RNOR or ROR?

A person who becomes resident specifically under the deemed-residence provision is RNOR.

This classification follows directly from:

• Section 6(6)(d) of the Income-tax Act, 1961.
• Section 6(13)(c) of the Income-tax Act, 2025.

The individual does not have to satisfy the separate historical non-residence or day-count conditions ordinarily used to establish RNOR status.

However, a person who becomes resident under the normal physical-presence rules must determine RNOR or ROR status under the provisions applicable to that route.

The difference matters because RNOR and ROR have different scopes of taxable income.

An ROR is generally taxable in India on worldwide income, subject to the applicable Act and treaty provisions.

An RNOR has a narrower Indian income-tax scope.

Deemed residence therefore does not automatically mean worldwide-income taxation in India.

What income can India tax when you are a deemed resident?

Section 5 of the applicable Income-tax Act determines the scope of total income.

For an RNOR, Indian taxable income generally includes:

1. Income received or deemed to be received in India.
2. Income accruing or arising, or deemed to accrue or arise, in India.
3. Income accruing or arising outside India where derived from a business controlled in India or a profession set up in India.

Other income accruing abroad and first received abroad is not brought into the Indian tax base merely because the individual becomes a deemed resident, subject to the applicable statutory provisions.

Income or transaction	Controlling Indian tax question
Indian property rent	Source and applicable income computation
Indian shares or property sale	Capital-gains rules and applicable relief
Salary earned and first received abroad	Source, place of first receipt and any Indian inclusion provision
Foreign business controlled in India	Special RNOR rule for business income
Foreign income first received in India	Indian receipt and applicable scope-of-income rules
Transfer to India of income already received abroad	Whether this is a subsequent transfer of funds rather than a fresh income receipt

The difference between first receipt and later remittance is particularly important.

Income actually received outside India and subsequently transferred to an Indian bank account is not necessarily treated in the same way as income first received in India.

The source, accrual, receipt and nature of the underlying income must be established.

Similarly, the use of an NRE or NRO account does not by itself determine the taxability of income credited to it.

Banking classification and income-tax liability are separate questions.

Example: Indian income and foreign salary

Assume the following facts for tax year 2026-27.

An Indian citizen lives throughout the year outside India and spends no days in India.

The person has ₹16 lakh of total income after excluding foreign-source income as defined in section 6(14), properly computed under the relevant provisions.

The individual also earns ₹40 lakh in salary for employment performed entirely abroad. The salary accrues and is first received outside India.

Assume that the individual is not liable to income tax in any other country by reason of domicile, residence or similar criteria. There is no business controlled in India or profession set up in India, and no other Indian income-inclusion provision applies to the foreign salary.

On those assumptions:

• The person is an Indian citizen.
• The statutory income amount exceeds ₹15 lakh.
• The foreign liability-to-tax condition is satisfied.
• The ordinary Indian physical-presence tests do not establish residence.

The individual is therefore deemed resident under section 6(7) of the Income-tax Act, 2025 and classified as RNOR under section 6(13)(c).

The ₹40 lakh overseas salary does not become taxable in India merely because of that deemed-residence classification.

However, the conclusion could change if the actual place of receipt, source of the income, applicable foreign-law liability or other controlling facts were different.

This is an illustrative statutory example, not a determination of any individual’s tax position.

What changed from 1 April 2026?

The deemed-residence provision did not originate under the Income-tax Act, 2025.

The concept already existed under the Income-tax Act, 1961.

The 2025 Act continues the core mechanism with revised statutory numbering.

Subject	FY 2025-26 and earlier relevant periods	Tax year 2026-27 onwards
Governing Act	Income-tax Act, 1961	Income-tax Act, 2025
Deemed residence	Section 6(1A)	Section 6(7), read with 6(8)
RNOR classification	Section 6(6)(d)	Section 6(13)(c)
Definition of liable to tax	Section 2(29A)	Section 2(66)
Scope of total income	Section 5	Section 5

For FY 2025-26, residential status continues to be determined under the 1961 Act, even when the relevant return or assessment is dealt with after 1 April 2026.

For tax year 2026-27 onwards, the 2025 Act applies, subject to its commencement and savings provisions.

Residential status must be determined separately for each year.

The date a person moves between countries does not necessarily coincide with the dates on which different legal classifications apply.

Does a deemed resident need to file an Indian income-tax return?

A person satisfying the deemed-residence provision necessarily has more than ₹15 lakh of total income after excluding the specified foreign-source income.

An Indian income-tax return would therefore ordinarily be required, subject to the relevant filing conditions and any specific statutory exception.

For earlier periods, section 139 of the Income-tax Act, 1961 governs return-filing requirements.

For tax year 2026-27 onwards, the relevant provision is section 263 of the Income-tax Act, 2025.

Foreign-asset reporting is a separate issue.

Under currently published Income Tax Department guidance for the notified ITR-2 forms, Schedule FA need not be completed by taxpayers classified as Non-Resident or Resident but Not Ordinarily Resident.

Further, section 263(1)(a)(ix) of the 2025 Act expressly distinguishes residents other than RNOR for the particular mandatory return-filing category based on holding specified foreign assets, interests or signing authority.

That exclusion does not remove an RNOR individual’s income-based filing obligation, nor does it mean that all foreign-income reporting requirements disappear.

The actual ITR forms and schedules for tax year 2026-27 must be checked against the instructions applicable when that return is filed.

The income-tax classification also does not automatically determine FEMA residence or eligibility to maintain an NRE, NRO or other Indian bank account.

Which records matter when examining deemed residence?

The analysis normally requires evidence in five categories.

Evidence category	What it helps establish
Passport and citizenship records	Indian citizenship
Travel and immigration records	Applicability of ordinary residence tests
Income computation and supporting records	Statutory ₹15 lakh threshold
Foreign tax-law, residence and liability records	Nature and legal basis of foreign tax liability
Salary, business, investment and banking records	Income source, accrual, first receipt and the applicable Indian tax scope

A residence visa cannot establish the entire deemed-residence test.

A foreign tax-residence certificate may be relevant but must be read against the particular legal question.

An Indian bank statement can establish a credit without necessarily proving whether the underlying amount is income, a capital receipt or a transfer of previously received funds.

The controlling distinction is between the individual’s residence classification, the character of the income and the documentary evidence supporting each.

What should remain clear?

Deemed residence is not a rule that taxes every Indian citizen living in a low-tax country on worldwide income.

It is a particular route to Indian income-tax residence involving citizenship, the prescribed income threshold and the specified absence of foreign tax liability.

If the provision applies, the person is RNOR.

That answers the residence question.

Which income India may tax is the next question, determined under the RNOR scope-of-income provisions.

Deemed residence determines a status. It does not, by itself, determine the tax treatment of every foreign receipt.

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Official sources

1. Income-tax Act, 2025, as amended by the Finance Act, 2026. Sections 2(66), 2(78), 5, 6, 263 and 536.
2. Income-tax Act, 1961, section 6. Residence and RNOR provisions.
3. Income-tax Act, 1961, section 5. Scope of total income.
4. Income Tax Department: Non-Resident FAQs. Deemed-residence and transition explanations.
5. Income Tax Department: ITR-2 User Manual. Currently published Schedule FA guidance.
6. India-UAE DTAA: Synthesised Text. Article 4, subject to the authentic agreement, protocols and applicable modifications.
7. UAE Federal Tax Authority: Basis of Taxation for Natural Persons.

This article provides general India-side educational information. It is not personal tax, legal or other professional advice. Foreign-country tax residence, liability to tax and treaty matters require consideration of the applicable foreign law and, where appropriate, review by a qualified professional in that country.