New tax residency rules in India, primarily driven by the Finance Act 2020 and updated by the 2025 Income Tax Bill, reduce the safe-stay limit for High-Net-Worth NRIs/PIOs to 120 days. Individuals with Indian income exceeding ₹15 lakh, visiting for 120-181 days, are now classified as "Resident but Not Ordinarily Resident" (RNOR).
Non-resident Indians (NRIs) are taxed on income earned or collected in India. This could be from sources like property rent, share dividends, and investment and savings capital gains, if over a specified limit. Income earned outside India is not taxable in India.
Residential Status of Indian Citizens Leaving India for Employment. In case you are an Indian citizen, and you leave India for employment outside of India, or as a member of the crew on an Indian ship, your status will be a Non-Resident Indian (NRI) if you stay in India in the previous year for less than 182 days.
You're a resident if either apply: Present in California for other than a temporary or transitory purpose. Domiciled in California, but outside California for a temporary or transitory purpose.
NRI days calculator
So, deriving from that, an NRI is one who is: Present in India for less than 182 days during that fiscal year, or. Present in India for less than 60 days during that fiscal year and cumulatively 365 days or less during the preceding four fiscal years.
The most common penalty is the failure-to-file penalty, which is 5% of the unpaid taxes for each month the return is late, up to a maximum of 25%. However, many US expats owe no US tax due to the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC), so this penalty might not apply.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
What is the 90% Rule? In a nutshell, the 90% rule is simple: if 90% or more of your worldwide income is from Canadian sources in the tax year, you're eligible for non-refundable tax credits reserved for residents.
California's “Safe Harbor Rule”
This rule allows you to remain out of the state for 546 consecutive days (about 18 months) for an employment-related reason, such as a temporary work assignment abroad or in another state. During this period, California will not consider you a resident for tax purposes.
As an NRI, PIO, or OCI, you may be required to file tax returns in India if your Indian income surpasses the specified threshold or if you seek to claim refunds for excess tax deductions. While filing an ITR is mandatory only under certain circumstances, voluntary filing can be beneficial in many ways.
The 183-day rule refers to a tax exemption system for short-term visitors included in many tax treaties. In Japan, there is an arrangement where individuals dispatched from abroad who stay for 183 days or less in a year and meet certain conditions may be exempt from income tax on their salary in Japan.
182 Days Tax Rule in India for NRIs. NRIs are individuals who have a family lineage of Indian parents/grandparents but have been living outside India for more than half of the previous year and intend to do so for an indefinite period of time for the purpose of education, employment, profession, etc.
If you fail to declare your NRI status and are treated as a resident, your global income may be taxed in India. Non-disclosure could lead to: Penalties under Section 271F: A fine of ₹10,000 for failure to file an Income Tax Return (ITR). Interest under Section 234A/B/C: For delay in filing or paying advance tax.
Examples of income that are not taxable in India include agricultural income, gifts and inheritances, interest on EPF and PPF, scholarships and awards, life insurance proceeds, leave encashment, gratuity, Long-Term Capital Gains (LTCG), and interest on tax-free bonds.
According to government reports, while over 7 crore people file tax returns, only a fraction of them actually pay taxes because many fall below the taxable income threshold or use deductions to reduce liability.
If you don't owe any taxes or if you're owed a refund, there's no penalty for not filing your tax return. But you won't receive your refund until you do file. There won't be a penalty for filing late — just get your paperwork to the IRS so they can process your taxes and issue the refund.
When you move overseas, your residential status changes to a Non-Resident Indian (NRI). As per the prevailing Foreign Exchange Management Act (FEMA) regulations, an NRI is mandated to either: Close the existing resident savings account in India and open a new NRI account; or.