NRI Returning to India Mid-Year: Residential Status and Foreign-Income Transition File
By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026
2-minute summary
- A person returning to India mid-year should not decide taxability by visa, passport or FEMA status alone. Income-tax residential status is a separate statutory test based on days of presence and special rules. The Income Tax Department’s 2025 Act NRI FAQ confirms that the core residence tests continue and that the new Act applies prospectively to Tax Years beginning on or after 1 April 2026.
- The transition can create two different analyses close together: FY 2025-26 / AY 2026-27 remains under the 1961 Act, while Tax Year 2026-27 uses section 6 of the 2025 Act. RNOR status is particularly important because foreign-income/foreign-asset scope can differ from that of an ordinarily resident individual.
- Build a day-count and income-source file before preparing the return. Record every India arrival/departure, prior-year presence, citizenship/Indian-origin facts where special tests apply, foreign employment end date, salary period, foreign bank/investment income and the date India services begin.
Current position
Control and evidence map
| # | Control / evidence requirement |
|---|---|
| 1 | Create an India day-count calendar supported by passport/travel records. |
| 2 | Apply the correct old/new Act to the year rather than using one residence label for both AY 2026-27 and TY 2026-27. |
| 3 | Test special rules for Indian citizens/persons of Indian origin where relevant. |
| 4 | Determine whether resident status is ordinary resident or RNOR before analysing foreign income/assets. |
| 5 | Split salary and other income by source/accrual rules and keep foreign tax/residence certificates where treaty claims may arise. |
Worked example
An Indian citizen returns permanently on 1 September 2026 after many years abroad. For AY 2026-27, residence is still determined for FY 2025-26 under the 1961 Act. For Tax Year 2026-27, days from April 2026 to March 2027 are tested under the Income Tax Act, 2025 together with the prescribed look-back rules. The taxpayer may be resident but RNOR depending on history; that distinction can materially affect foreign-income reporting.
Common mistakes
- Using FEMA “resident” status as the income-tax answer.
- Counting only days after the permanent-return date and ignoring earlier visits.
- Failing to test RNOR after becoming resident.
- Applying the 2025 Act to FY 2025-26 merely because the return is filed after April 2026.
Frequently asked questions
Did the basic residence test change completely under the 2025 Act?
The Department says the core tests have been retained, with the new Act applying from Tax Year 2026-27.
Does returning to India make me resident from that day?
Not automatically; apply the statutory day-count tests for the whole tax year.
Why does RNOR matter?
It can change the Indian tax/reporting scope for foreign income and assets.
Official sources
- Income Tax Department - Non Resident FAQs under Income Tax Act, 2025 (Section 6 transition FAQ; 2026)
- Income Tax Department - Income Tax Returns FAQs - 1961 Act / 2025 Act transition (Current FAQ; 2026)
- Income Tax Department - Income Tax Act, 2025 - official transition and guidance hub (Income-tax Act, 2025; effective 2026-04-01)
Disclaimer
Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.