Residency rules for expats during extended India stay

Understanding Tax Residency in India

Impact of Extended Stays on Tax Status

Understanding the Tax Impact of Residency Rules on NRIs

Particulars ROR RNOR NR (Non-Residents) Income received or deemed to be received in India Taxable Taxable Taxable Income accruing or arising or deemed to accrue or arise in India Taxable Taxable Taxable Income accruing or arising outside India - Business controlled in India or profession set up in India

Other Income Taxable

Taxable Taxable

Not Taxable Not Taxable Not Taxable Global Income Taxable Not Taxable Not Taxable Foreign Assets Disclosure Requirements under the IT Act Required Not Required Not Required

Issues regarding double taxation

Temporary Immigration Relief Introduced Without Corresponding Tax Clarity

Key Takeaways

In an increasingly interconnected world, global mobility is central to both business and personal life. However, unforeseen disruptions such as the COVID-19 pandemic and ongoing geopolitical tensions in the Middle East have significantly altered travel patterns, forcing many expatriates to remain in India longer than intended due to restrictions, safety concerns, or disrupted flight operations.During COVID-19, lockdowns and border closures left individuals stranded, while the Middle East crisis has similarly prompted temporary relocations and extended stays in India. As a result, short-term visits have often turned into prolonged periods of presence.These extended stays can trigger important tax consequences. Since Indian tax residency is determined by the number of days spent in the country, individuals may see an inadvertently shift in their residency status from non-resident to resident or Resident but Not Ordinarily Resident (RNOR). This can expand the scope of taxable income, impact exemptions, and increase compliance requirements.Against this backdrop, this article examines these issues in detail, including residency thresholds, government relaxations, and the broader cross-border tax implications for expatriates. Residential status under Section 6 of the Income-tax Act, 1961 serves as the cornerstone for determining the scope of an individual’s tax liability in India.It is a fundamental concept that dictates whether a person will be taxed on their global income or only on income that is earned or received or deemed to accrue or arise within India. Importantly, residential status is not determined by citizenship or domicile, but purely on the basis of an individual’s physical presence in India during a financial year (FY).As per Section 6 of the Act, an individual is considered a resident in India if they satisfy at least 1 of the prescribed conditions. Broadly, a person qualifies as a resident if they stay in India for 182 days or more during the relevant FY.Alternatively, a person may also qualify as a resident if they are present in India for 60 days or more during the FY and have stayed in India for 365 days or more during the preceding 4 FYs. However, certain relaxations are available for Indian citizens and Persons of Indian Origin (PIOs) visiting India, where the 60 days threshold may be extended to 120 days or even 182 days, depending on their income levels.Once an individual qualifies as a resident, a further classification is required to determine whether they are Resident and Ordinarily Resident (ROR) or a RNOR. An individual is treated as ROR if they have been a resident in India for at least 2 out of the 10 preceding FYs and have stayed in India for 730 days or more during the 7 preceding FYs. This classification carries significant tax implications, as ROR individuals are subject to tax in India on their global income, including income earned outside India.On the other hand, individuals who qualify as residents but do not meet the additional conditions are classified as RNOR. This category provides a limited tax exposure, as RNORs are taxed only on income that is received or accrued in India, as well as income derived from a business or profession controlled from India. If an individual does not satisfy any of the basic conditions prescribed under Section 6, they are treated as non-resident.In order to address potential tax avoidance, the law also introduces the concept of deemed residency. Under this provision, an Indian citizen whose total income (excluding foreign-sourced income) exceeds Rs. 15 lakhs and who is not liable to tax in any other country may be deemed to be a resident in India. Such individuals are typically treated as RNOR, thereby ensuring that while they are brought within the tax framework, their foreign income is not fully subjected to Indian taxation.In practice, determining residential status can often be complex, particularly in situations involving frequent travel, dual-country presence, or unforeseen extensions of stay due to events such as the COVID-19 pandemic or geopolitical disruptions. Individuals may inadvertently cross the prescribed thresholds, resulting in a change in their residential status and, consequently, their tax obligations.This may lead to taxation of global income, loss of certain non-resident benefits, and additional compliance requirements such as reporting of foreign assets and bank accounts.Extended or unplanned stays in India can inadvertently trigger a change in residential status. For instance, an NRI staying in India for more than 182 days may become a tax resident, thereby bringing their global income within the Indian tax net.Such transitions can significantly increase tax exposure and compliance obligations, particularly for expatriates with substantial overseas income.The scope of taxation varies significantly depending on residential status, as illustrated below:Tax compliance obligations are linked to residential status. Non-Residents (NRIs) are generally required to file an Indian income tax return only if their taxable income in India exceeds the prescribed threshold (Rs 2.5 lakh under the old tax regime or Rs 4 lakh under the new regime), or in specific cases such as capital gains or high-value transactions. Importantly, NRIs are taxed only on income that is received, deemed to be received, or accrues in India. In contrast, individuals qualifying as ROR are subject to tax on their global income in India.For individuals transitioning from non-resident to resident status, the compliance burden increases substantially. They must collate details of worldwide income, track foreign assets, and evaluate eligibility for foreign tax credits to mitigate double taxation.A change in residential status can give rise to significant double taxation concerns, particularly where an individual becomes taxable in India while continuing to have tax obligations in another country. In such cases, the same income such as salary, dividends, or capital gains may be subject to tax in both jurisdictions.Although India has entered into Double Taxation Avoidance Agreements (DTAAs) with several countries to mitigate this risk, practical challenges often arise in claiming relief, such as differences in tax treatment, timing mismatches, and documentation requirements. Taxpayers must carefully evaluate applicable treaty provisions (including tie breaker test for residency determination), determine eligibility for foreign tax credits, and ensure proper disclosures to avoid excess taxation and potential disputes.As regional tensions in the Middle East continue to disrupt international air travel, several countries have introduced visa relief measures for foreign nationals stranded within their borders, with India joining this coordinated response.In a statement issued on March 13, 2026 and communicated through multiple Indian diplomatic missions including those in the United Arab Emirates, Bahrain, Jordan, etc. the Government of India announced a set of exceptional measures for foreign nationals impacted by the ongoing developments in ‘West Asia.’ All categories of visas and e-visas expiring or due to expire shortly will be extended by 1 month on a gratis basis, on a case-to-case basis.However, it is pertinent to note that no corresponding relief has yet been announced under the Income-tax Act in India. During the COVID-19 pandemic, similar circumstances had prompted the government to provide relaxations in determining residential status for tax purposes. In the present scenario, while comparable relief is anticipated, formal clarification from the tax authorities is still awaited.Residential status plays a decisive role in determining the tax obligations of NRIs in India, and even minor changes in travel patterns can materially impact tax exposure. Expatriates with extended stays in India should closely monitor the 182 / 120 days threshold.In situations involving unforeseen disruptions such as pandemics or geopolitical developments that result in prolonged stays, individuals should promptly evaluate any available relief measures or administrative relaxations issued by relevant authorities. A shift to resident status can result in the loss of foreign income exemptions and trigger additional reporting requirements, including disclosure of global income and assets.