Residential Status, Individual [Sec. 6(2)] to [Sec. 6(8)]

Under the Income tax Act, 2025, the residential status of an individual is determined under Section 6 and is important for deciding the extent of income taxable in India. The residential status is determined separately for each tax year, mainly on the basis of the individual’s physical stay in India. An individual may be classified as Resident, Resident but Not Ordinarily Resident (RNOR), or Non Resident (NR). Section 6(2) lays down the basic conditions for determining residence, while Sections 6(3) to 6(8) provide special rules for certain Indian citizens, persons of Indian origin, visiting individuals, deemed residents and related exceptions.

1. Basic Condition for Resident Individual [Section 6(2)]

An individual is considered resident in India if he satisfies either of the prescribed basic conditions during the relevant tax year. The first condition is that the individual must be in India for a total period of 182 days or more during that tax year. The second condition is that he must be in India for 60 days or more during the tax year and must have been in India for 365 days or more during the four preceding tax years. Therefore, physical presence in India is the main basis for determining residential status. Once either condition is satisfied, the individual becomes resident in India, subject to the special provisions applicable to certain Indian citizens and persons of Indian origin.

2. Individual Leaving India for Employment or as Ship Crew [Section 6(3)]

Section 6(3) provides a special rule for an Indian citizen who leaves India during a tax year either as a member of the crew of an Indian ship or for the purpose of employment outside India. In such cases, the normal 60 day condition mentioned in Section 6(2)(b) does not apply. This prevents individuals who leave India for employment abroad or qualifying ship crew duties from becoming resident merely because they satisfy the general 60 day and 365 day test. The provision recognises the special circumstances of persons working outside India and provides a specific relaxation in determining their residential status.

3. Citizen or Person of Indian Origin Visiting India [Section 6(4)]

Section 6(4) provides a special rule for an Indian citizen or a person of Indian origin who is living outside India and comes to India on a visit during a tax year. Normally, the 60 day condition under Section 6(2)(b) is not applied to such a visiting individual, subject to the special rule contained in Section 6(5). This provision is intended to provide relaxation to Indian citizens and persons of Indian origin residing abroad who visit India temporarily. However, where the individual satisfies the income condition specified in Section 6(5), the relaxed rule does not operate in the same manner and the prescribed 120 day threshold becomes relevant.

4. Special Rule for High Income Visiting Individual [Section 6(5)]

Section 6(5) applies to an individual covered by Section 6(4) whose total income exceeds ₹15 lakh during the relevant tax year, excluding income from foreign sources. In such a case, for applying Section 6(2)(b), the normal 60 day period is replaced by 120 days. Therefore, an Indian citizen or person of Indian origin visiting India may become resident if he stays in India for 120 days or more during the tax year and satisfies the prescribed 365 day condition for the preceding four tax years. This provision is designed to address the residential status of higher income individuals who live abroad but maintain substantial connections with India.

5. Crew of Foreign Bound Ship [Section 6(6)]

Section 6(6) provides a special method for determining the period of stay in India for an Indian citizen who is a member of the crew of a foreign bound ship leaving India. For the purpose of determining whether the individual satisfies the residence conditions under Section 6(2), the number of days spent in India in relation to such a voyage is determined in the manner and subject to the conditions prescribed by the Rules. This special provision recognises that the normal calculation of physical presence may not appropriately reflect the circumstances of ship crew members. Therefore, prescribed rules are followed for calculating their stay in India.

6. Deemed Resident Individual [Section 6(7)]

Section 6(7) provides for deemed residence in India in certain circumstances. An individual is deemed to be resident if he is an Indian citizen, is not liable to tax in any other country or territory because of domicile, residence or a similar criterion, and has total income exceeding ₹15 lakh, excluding income from foreign sources, during the relevant tax year. This provision addresses situations where an Indian citizen may not satisfy the ordinary physical stay conditions but is not liable to tax in any other country. The purpose is to prevent individuals from remaining outside the scope of taxation in both India and other jurisdictions merely because they do not meet the normal residence conditions.

7. Exception to Deemed Residence [Section 6(8)]

Section 6(8) provides an important exception to the deemed residence rule under Section 6(7). It states that Section 6(7) will not apply to an individual who is already resident in India under Sections 6(2) to 6(6). Therefore, the deemed residence provision is relevant only where the individual does not become resident under the ordinary or special residence conditions covered by the earlier subsections. This prevents duplication in determining residential status. In simple terms, if an individual is already treated as resident under the normal stay based rules or special provisions, there is no need to apply the deemed resident provision again.