The criteria for tax residency remained unchanged in the upcoming income tax bill. Ahead of the Bill being tabled, it was recommended by the reports to NRIs that those making Rs 15 lakh or exceeding that in India while not filing the taxes elsewhere shall be categorized as residents rather than residents but Not Ordinarily Resident (RNOR).
As per the proposed amendments these people will still be categorized as RNOR for tax purposes which makes them obligated to file the taxes on their income made in India.
Even under the Income Tax Bill 2025 (new bill), the said classification of taxpayers will continue to be deemed as RNOR and therefore the same tax treatment will continue.
For NRIs a person will be regarded as a resident for the tax objectives if they spend at least 182 days in India in a tax year or if they are in India for 60 days or exceeding in a tax year and have stayed cumulatively for 365 days or more in the preceding 4 years.
But the Indian citizens who leave India as crew members of an Indian ship or for employment abroad will not be within the 60-day rule. Likewise, NRIs visiting India will be waived from this condition. If these visitors make exceeding than Rs 15 lakh (excluding foreign-sourced income) then the 60-day rule will be extended to 120 days.
The tax law of India specifies residency based on physical presence instead of citizenship. At present, the NRIs are levied tax merely on their Indian-sourced income while their global income stays untaxed in India.
In various years concerns have been raised for the individuals who take the benefits of NRI status to prevent taxes while still making income from India the proposed amendments align with the global measures to curb tax evasion and ensure the taxation is effective.
