Neutral impactEconomy
Income Tax Act, 2025: NRI tax residency in India—182-day stay rule, ₹15 lakh threshold and ITR exemption condition
Mint 2 hrs ago·14 Oct 2026, 2:11 am
The government has introduced significant changes to the Income Tax Act, 2025, specifically concerning the tax residency of Non-Resident Indians (NRIs). The new rules update the criteria for determining tax residency, moving away from the previous 182-day rule to a more flexible 120-day test. This means an NRI may be considered a resident in India for tax purposes if they spend just 120 days in a financial year, provided they meet other specific conditions. The legislation also sets a ₹15 lakh threshold for deemed residency, which could impact a broader range of overseas investors.
This shift matters for investors as it expands the tax net, potentially bringing more foreign income under Indian tax jurisdiction. For NRIs, understanding these new thresholds is crucial to avoid unexpected tax liabilities. The rules also clarify the conditions for Income Tax Return (ITR) exemptions, ensuring that genuine non-residents are not burdened with filing requirements. Investors should review their residency status carefully to ensure compliance with the updated regulations.
Going forward, investors should monitor how these changes are implemented and the specific conditions attached to the 120-day test. It is advisable to consult a tax professional to assess personal residency status and plan investments accordingly. The transition to the new Act requires careful attention to detail to ensure that tax obligations are met without unnecessary complications.
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- Category: Economy.
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