Table of Contents

Section 6 of Income Tax Act 1961 – Residence in India

For the purposes of this Act,—

Section 6(1) of Income Tax Act 1961

An individual is said to be resident in India in any previous year, if he—

(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or

(b) [***]

(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation 1.—In the case of an individual,—

(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;

(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted and in case of such person having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, for the words “sixty days” occurring therein, the words “one hundred and twenty days” had been substituted.

Explanation 2.—For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.

Section 6(1A) of Income Tax Act 1961

Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

Explanation.—For the removal of doubts, it is hereby declared that this clause shall not apply in case of an individual who is said to be resident in India in the previous year under clause (1).

Section 6(2) of Income Tax Act 1961

A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

Section 6(3) of Income Tax Act 1961

A company is said to be a resident in India in any previous year, if—

(i) it is an Indian company; or

(ii) its place of effective management, in that year, is in India.

Explanation.—For the purposes of this clause “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.

Section 6(4) of Income Tax Act 1961

Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

Section 6(5) of Income Tax Act 1961

If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

Section 6(6) of Income Tax Act 1961

A person is said to be “not ordinarily resident” in India in any previous year if such person is—

(a)an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or

(b)a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or

(c) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation1 to clause (1), who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty-two days; or

(d) a citizen of India who is deemed to be resident in India under clause (1A).

Explanation.—For the purposes of this section, the expression “income from foreign sources” means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India) and which is not deemed to accrue or arise in India.

📊 Infographic: How Residential Status is Determined

Section 6 Residential Status under Income Tax Act

(1) An individual is said to be resident in India in any previous year, if he—

(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or

(b) [***]

(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation 1.—In the case of an individual,—

(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;

(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted and in case of such person having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, for the words “sixty days” occurring therein, the words “one hundred and twenty days” had been substituted.

Explanation 2.—For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.

(1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

Explanation.—For the removal of doubts, it is hereby declared that this clause shall not apply in case of an individual who is said to be resident in India in the previous year under clause (1).

(2) A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3) A company is said to be a resident in India in any previous year, if—

(i) it is an Indian company; or

(ii) its place of effective management, in that year, is in India.

(4) Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

(5) If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

(6)A person is said to be “not ordinarily resident” in India in any previous year if such person is—

(a)an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or

(b)a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or

(c) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation1 to clause (1), who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty-two days; or

(d) a citizen of India who is deemed to be resident in India under clause (1A).

Explanation of Section 6

Overview
Section 6 defines who is considered a resident in India for tax purposes, crucial for determining whether income is taxed globally or only within India.

It applies to individuals, Hindu Undivided Families (HUF), firms, associations of persons (AOP), and companies, with different criteria for each.

Section 6 defines when an individual or entity is considered a Resident or Non-Resident for income tax purposes. This status decides:

Which incomes are taxable in India
How much of your global income is taxed

🔍 Breakdown of Section 6: Categories of Residential Status

🧑‍💼 For Individuals:

An individual is said to be a Resident in India if they satisfy any one of the following:

✅ Basic Conditions (at least one must be fulfilled):

Stayed in India for 182 days or more in the financial year OR
Stayed in India for 60 days or more in the financial year AND 365 days or more in the 4 preceding years

⚠️ For Indian citizens or PIOs (coming on a visit): The 60-day condition becomes 182 days (or 120 days if income exceeds ₹15 lakh in India from FY 2020-21 onwards)

🟠 Resident but Not Ordinarily Resident (RNOR)

A resident individual is considered RNOR if:

They were non-resident in 9 out of 10 preceding years, or
Their stay in India during the last 7 years is ≤ 729 days

🔴 Non-Resident (NR):

If neither of the basic conditions is satisfied.

🏢 Residential Status for Other Categories

1. Hindu Undivided Family (HUF)

An HUF is considered Resident in India if control and management of its affairs is wholly or partly situated in India during the year.

If it is Resident, it will be:

Ordinarily Resident if Karta (head) satisfies both:
- Resident in India in at least 2 out of last 10 years
- Present in India for at least 730 days in last 7 years

Else → RNOR

2. Company

A company is Resident in India if:

It is incorporated in India, or
Its place of effective management (POEM) during the financial year is in India

🧠 POEM = Where key decisions are made. (Applies to foreign companies with ₹50 crore+ turnover)

3. Firm, LLP, AOP, BOI

A partnership firm, LLP, AOP, or BOI is Resident if control and management is wholly or partly in India.

Unlike individuals, days of stay don’t matter here. It’s all about where decisions are made.

💡 Tax Planning Based on Residential Status

Status	Best Tax Strategy
Resident	Consider global investments + DTAA benefits
RNOR	Use status to shield global income temporarily
Non-Resident	Invest in NRE/NRO accounts, avoid global taxation
Foreign Company	Ensure POEM is outside India to avoid Indian tax

📋 Compliance Checklist

✅ Calculate days of stay in India each year
✅ Track income sources (India vs. foreign)
✅ File appropriate ITR form (ITR-1, ITR-2, ITR-3, etc.)
✅ Declare foreign assets (if Resident) in Schedule FA
✅ Use DTAA (Double Taxation Avoidance Agreement) if income is taxed in both countries

⚠️ Penalties to Watch Out For

Mistake	Penalty
Not reporting foreign assets	₹10 lakh under Black Money Act
Filing wrong return type	Notice + Reassessment
Misreporting status to avoid tax	Prosecution or 200% penalty under misreporting provisions

📘 Real-Life Inspired Scenario: Dual Residency Conflict

Case: Ms. Aditi – Working in UK, Visiting India Frequently

Stayed in India for 130 days
Meets UK tax residency criteria
Earns ₹18 lakh from rental in India + £40,000 salary in UK

Status in India: Resident (due to Indian income and stay duration)
But UK also considers her Resident → Dual Residency

✅ Solution:

Apply DTAA between India-UK
Tie-breaker rules help decide which country gets taxing rights
Claim tax credit in one country for taxes paid in the other

📌 Pro Tips for Taxpayers

💡 Maintain a travel diary – Number of days in India is crucial
💡 Use a residency calculator tool or ask your CA
💡 If you’re likely to become Resident, plan investments accordingly
💡 Take legal help in case of dual residency or POEM challenges
💡 If you earn abroad and are RNOR, repatriate smartly using DTAA

🧾 Final Takeaways

Residential status is evaluated every year
Determines whether global income is taxable in India
Track your days in India carefully
Use DTAA, RNOR, and exemptions smartly for tax planning
Always file accurate returns based on your status to avoid penalties

🧠 Examples of Section 6 in Action

🧑‍💻 Example 1: Indian working in UAE

Ravi, an Indian citizen, works in Dubai and visits India for 110 days in FY 2024–25. His Indian income exceeds ₹15 lakhs.

He spent less than 120 days
Does not qualify under either condition
Result: He is a Non-Resident

✈️ Example 2: Frequent flyer

Sonia works abroad but visited India for 70 days this year. In the past 4 years, she stayed 380 days total.

Meets second basic condition
Result: Resident (because 70 > 60 and past 4 years > 365)

🧑‍⚖️ Case Study: Mr. Mehta – The Global Consultant

Background:

Mr. Mehta, an Indian citizen, spent:

100 days in India in FY 2024-25
380 days in the last 4 years
Earns ₹22 lakh from Indian investments
Lives in Singapore

Analysis:

Because income exceeds ₹15 lakh and stay is over 120 days, Section 6 deems him Resident
But since he was non-resident in 9 of the last 10 years, he is Resident but Not Ordinarily Resident (RNOR)

Background and Legal Framework

Section 6, part of Chapter II (Basis of Charge, Sections 4 to 9A) of the Income Tax Act 1961, came into effect from April 1, 1962, and defines residency for taxation. It is pivotal for classifying taxpayers into Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (RNOR), and Non-Resident (NR), impacting tax liability. The provision has evolved with amendments, notably in 2015 for companies with the introduction of Place of Effective Management (POEM), and recent updates for deemed residency based on income thresholds, effective for assessment year 2025-26.

Detailed Explanation of Section 6

Section 6 is divided into several clauses, each addressing different entities:

Clause	Entity	Residency Criteria
(1)	Individual	Resident if: <br>- In India ≥ 182 days in previous year, OR <br>- In India ≥ 60 days in previous year AND ≥ 365 days in preceding 4 years.
	Exceptions	– Citizen/PIO with income ≤ ₹15 lakhs (excl. foreign): 60 days → 182 days. <br>- Citizen/PIO with income > ₹15 lakhs: 60 days → 120 days. <br>- Citizen leaving for employment/ship crew: 60 days → 182 days.
	Deemed Resident	Citizen with income > ₹15 lakhs (excl. foreign), not liable to tax elsewhere, deemed resident.
(2)	HUF, Firm, AOP	Resident if control/management not wholly outside India.
(3)	Company	Resident if Indian company OR POEM in India (key decisions made in India, per Finance Act 2015).
(4)	Every Other Person	Resident if control/management not wholly outside India.
(5)	General Rule	Resident for one source of income deemed resident for all sources, relevant to assessment year.
(6)	Not Ordinarily Resident (NOR)	Individual NOR if: <br>- Non-resident in 9/10 preceding years, OR <br>- In India ≤ 729 days in preceding 7 years. <br>- HUF: Manager meets individual criteria.

The term “income from foreign sources” is defined as income accruing or arising outside India, except for business/profession controlled in India. “Non-resident Indian (NRI)” refers to citizens/PIO not resident, and “Person of Indian Origin (PIO)” includes those whose parents or grandparents were born in undivided India.

Practical Examples

To illustrate, consider the following scenarios for FY 2024-25:

Scenario	Details	Analysis	Conclusion
Mr. X, Indian Citizen	Stayed 200 days in India, income ₹10 lakhs.	Meets first condition (≥ 182 days).	Resident, ROR likely, taxable globally.
Ms. Y, NRI	Stayed 70 days in FY 2024-25, 400 days in preceding 4 years, income ₹8 lakhs.	Meets second condition (≥ 60 days AND ≥ 365 days over 4 years).	Resident, ROR likely, taxable globally.
Mr. Z, PIO, Visiting India	Stayed 100 days, income ₹10 lakhs (≤ ₹15 lakhs, excl. foreign).	60 days → 182 days, 100 < 182, does not meet condition.	Non-resident, taxable only on Indian income.
Ms. A, Indian Citizen	Income ₹20 lakhs (excl. foreign), not taxed elsewhere, stayed 150 days.	Deemed resident per clause (1), does not meet standard conditions.	Deemed resident, taxable globally.

Comparative Analysis: With and Without Exceptions

For citizens/PIO with income > ₹15 lakhs, the 120-day rule (instead of 60) ensures higher scrutiny for residency, potentially increasing tax liability. For instance, if Mr. B, a PIO, stays 130 days with income ₹20 lakhs, he is resident, taxable globally, compared to a non-resident status at 100 days with income ≤ ₹15 lakhs, taxable only on Indian income.

Case Studies and Judicial Precedents

Section 6’s application has been shaped by practical scenarios and discussions, as seen in comments on tax forums:

Case Reference	Year	Details	Ruling/Impact
Naveen Chandra (Comment, TaxGuru)	2020	Returned to India 30-6-2020, stayed 275 days due to COVID, RNOR in FY 2010-11, FY 2017-18, NRI otherwise.	RNOR for FY 2020-21, overseas earnings not taxable.
ABC Ltd. (Hypothetical, POEM)	2025	Foreign company, key decisions in India, POEM in India.	Resident company, taxable on global income.

✅ Final Summary Table:

Status	Global Income Taxed?	Income in India Taxed?
Resident & Ordinarily Resident	✅ Yes	✅ Yes
Resident but Not Ordinarily Resident	❌ No	✅ Yes
Non-Resident	❌ No	✅ Yes