Impact of new Income Tax Bill on NRIs
The Income Tax Bill 2025 has retained the existing tax residency criteria, providing relief to Non-Resident Indians (NRIs). Earlier reports speculated that NRIs earning Rs 15 lakh or more in India while not paying taxes elsewhere would be reclassified as residents instead of Resident but Not Ordinarily Resident (RNOR).
However, under the proposed bill, such individuals will continue to be classified as RNOR, ensuring that they are taxed only on income earned in India.
As per existing rules, an individual is considered a resident for tax purposes if:
- They spend at least 182 days in India in a financial year, or
- They stay for 60 days or more in a financial year and 365 days or more in the preceding four years.
Exceptions apply to:
- Indian citizens leaving the country as crew members of an Indian ship or for employment abroad (not subject to the 60-day rule).
- NRIs visiting India, where the 60-day rule is extended to 120 days if their Indian income exceeds Rs 15 lakh (excluding foreign-sourced earnings).
This clarification maintains the existing tax treatment for NRIs, ensuring continuity in taxation policies.
