Residence in India and Income Deemed to Be Received

Section 6 - Residence in India

Residential status determines the territorial scope of income that may enter a person's total income. Under the Income-tax Act, 2025, Section 6 lays down the tests for deciding whether an individual or another person is resident in India for a tax year. The basic individual tests remain substantially the same as under Section 6 of the Income-tax Act, 1961.

When is an individual resident in India?

Under Section 6(2) of the Income-tax Act, 2025, an individual is resident in India for a tax year if either of these basic conditions is satisfied:

1. The individual is in India for a total of 182 days or more during that tax year; or
2. The individual is in India for 60 days or more during that tax year and was in India for a total of 365 days or more during the four years preceding that tax year.

These tests must be read with the special rules for Indian citizens leaving India, Indian citizens or persons of Indian origin visiting India, and deemed residents.

Special rules for Indian citizens and persons of Indian origin

For an Indian citizen who leaves India during the tax year as a crew member of an Indian ship or for employment outside India, the ordinary 60-day limb does not apply. The 182-day test is relevant for that special case.

For an Indian citizen or a person of Indian origin who is outside India and comes on a visit to India, the ordinary 60-day limb is also displaced, subject to the special 120-day rule described below.

For a citizen of India who is a member of the crew of a foreign-bound ship leaving India, the number of days in India for the voyage is determined in the prescribed manner and subject to prescribed conditions.

Deemed resident of India

Section 6(7) of the Income-tax Act, 2025 provides a deemed-residence rule for an Indian citizen whose total income, excluding income from foreign sources, exceeds Rs. 15 lakh during the tax year and who is not liable to tax in any other country or territory by reason of domicile, residence or a similar criterion. The rule does not apply where the individual is already resident under the ordinary residence provisions.

An individual who becomes resident only under this deemed-residence rule falls within the statutory category of not ordinarily resident.

Residence of HUF, firm, association, company and other persons

Place of effective management (POEM) means the place where the key management and commercial decisions necessary for conducting the business of the company as a whole are, in substance, made.

Resident but not ordinarily resident

Section 6(13) of the Income-tax Act, 2025 identifies the cases in which a person is not ordinarily resident. In broad terms, this includes:

• an individual who was non-resident in India in nine out of the ten preceding tax years, or whose stay in India was 729 days or less during the seven preceding tax years;
• an HUF whose manager satisfies the corresponding historical non-residence or 729-day test;
• a qualifying Indian citizen or person of Indian origin with income above Rs. 15 lakh who is in India for 120 days or more but less than 182 days under the special visiting rule; and
• an Indian citizen who is deemed resident under Section 6(7).

For Section 6, income from foreign sources broadly means income accruing or arising outside India, excluding income derived from a business controlled in India or a profession set up in India, and excluding income deemed to accrue or arise in India.

Section 7 - Income Deemed to Be Received

Under the Income-tax Act, 2025, Section 7 combines rules that were previously found in Sections 7 and 8 of the Income-tax Act, 1961. For the subject covered by the old Section 7, Section 7(1) treats specified amounts as income deemed to be received in the tax year.

The relevant categories include statutory amounts connected with a recognised provident fund and contributions by the Central Government or another employer to an employee's account under the pension scheme corresponding to the earlier Section 80CCD framework. The precise tax treatment depends on the applicable provisions and schedules for the relevant tax year.

Income that is received or deemed to be received in India is relevant to the scope of total income under Section 5 of the Income-tax Act, 2025, including for a non-resident, subject to the other provisions of the Act and any applicable tax treaty.

Sections 6 and 7 of the Income-tax Act, 1961 - Earlier Tax Years

For tax years beginning before 1 April 2026, residential status continues to be determined under Section 6 of the Income-tax Act, 1961. The savings and transition framework preserves the old Act for proceedings relating to those earlier years even where the proceeding takes place after commencement of the 2025 Act.

Under Section 6 of the 1961 Act, the principal residence tests included the 182-day test and the 60-day plus 365-day test, together with the special 182-day and 120-day rules, the deemed-resident provision in Section 6(1A), POEM for companies, and the tests for not ordinarily resident status in Section 6(6).

Section 7 of the 1961 Act treated specified provident-fund accretions, transferred balances in a recognised provident fund, and specified employer or Central Government pension-scheme contributions as income deemed to be received in the previous year.

Official Income Tax Resources

• Income Tax Department - Section 6, Income-tax Act, 2025
• Income Tax Department - Non-Resident FAQs and transition guidance
• Income Tax Department - Non-Resident Individual, AY 2026-27
• Income Tax Department - Income-tax Act, 1961 as amended by Finance Act, 2025

This article is a general statutory guide. Residential status can turn on exact travel dates, citizenship, income composition, foreign tax liability, treaty residence and the tax year involved.