How Do Indian Tax Residency Rules Apply to Expats?
India has become one of the most attractive destinations for professionals, entrepreneurs, and expats relocating for both short- and long-term assignments. But with relocation comes the complex question of taxation. Understanding how Indian tax residency rules apply to expats is essential because it directly determines your tax liabilities, exemptions, and compliance obligations.
In this comprehensive guide, we’ll break down how residency status is determined, how it impacts expat tax, the implications for income tax for expats in India, and how platforms like Adopremium help expats navigate the financial and legal side of living in India.
Why Tax Residency Matters for Expats
Tax residency rules decide how much of your income is taxable in India. An expat’s global income may or may not be taxed here depending on whether they are classified as:
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Resident and Ordinarily Resident (ROR)
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Resident but Not Ordinarily Resident (RNOR)
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Non-Resident (NR)
Understanding these categories helps expats plan their finances better and avoid double taxation.
The Legal Framework of Expat Taxation in India
The Indian Income Tax Act, 1961, lays down the rules for taxation. For expats, the following sections are crucial:
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Section 6 – Defines residency rules
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DTAA (Double Taxation Avoidance Agreements) – Ensures expats don’t pay tax twice on the same income
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Form 67 – Mandatory for claiming foreign tax credits under DTAA
By applying these rules, authorities determine if your income tax for expats in India will apply only on Indian-sourced income or on global income.
Determining Tax Residency for Expats
1. Stay Duration Rule
Your residency is determined by the number of days you stay in India during a financial year (April–March):
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Resident: If you stay 182 days or more in India during a financial year.
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Resident (alternative test): If you stay 60 days or more in a financial year AND 365 days or more in the preceding 4 years.
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Non-Resident (NR): If you don’t meet the above criteria.
2. Sub-Categories of Residents
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Resident and Ordinarily Resident (ROR): Taxed on global income.
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Resident but Not Ordinarily Resident (RNOR): Taxed only on Indian income and income sourced from a business controlled from India.
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Non-Resident (NR): Taxed only on income received or accrued in India.
Real-Life Example of Expat Residency Status
Consider John, an expat IT consultant from the UK.
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He stayed in India for 200 days in 2023-24 → He qualifies as a Resident.
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Since he has been in India for less than 730 days in the last 7 years, he becomes RNOR.
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Therefore, John will pay income tax for expats in India only on Indian-sourced income and not on his UK earnings.
This shows how residency status directly influences expat taxation.
Expat Tax: What Income is Taxable in India?
For Non-Residents (NR)
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Salary received in India
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Income from services provided in India
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Rental income from property in India
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Capital gains on assets located in India
For RNORs
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All of the above plus:
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Income from businesses controlled from India
For RORs
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Global income is taxable in India, including foreign salaries, overseas investments, and rental income abroad.
This classification is why expat tax planning is so important.
Double Taxation Avoidance Agreement (DTAA)
India has signed DTAA treaties with over 80 countries, including the US, UK, Canada, and Singapore.
Benefits of DTAA:
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Prevents double taxation of the same income
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Allows tax credits or exemptions
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Ensures clarity on where tax must be paid
Expats must file Form 67 to claim foreign tax credits under DTAA.
Key Challenges Expats Face with Indian Tax Residency
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Unfamiliarity with Indian tax laws
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Complexity in determining residency status
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Global income vs. Indian income confusion
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Documentation for DTAA claims
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Filing deadlines and compliance
This is why many expats rely on advisory and professional services to remain compliant.
How Adopremium Helps Expats with Taxation
At Adopremium, we go beyond offering serviced apartments in India. We also provide guidance and resources around expat tax and related compliance, helping foreign professionals make smooth transitions.
Expats staying in Adopremium serviced apartments benefit from:
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Guidance on income tax for expats in India
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Clarity on DTAA and residency status
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Access to professional tax advisory networks
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Hassle-free living while focusing on work or personal commitments
Best Practices for Expats to Manage Taxes in India
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Track your stay days – Keep precise records of arrival and departure.
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Understand DTAA benefits – Claim exemptions to avoid double taxation.
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Maintain proper documentation – Salary slips, tax certificates, and rental agreements.
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File taxes on time – Usually by 31st July of the assessment year.
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Consult experts – Avoid penalties and ensure compliance.
Related FAQs About Expat Tax
Conclusion
Indian tax residency rules are the foundation of expat tax compliance. Whether you’re a Non-Resident, RNOR, or ROR, your status directly impacts income tax for expats in India and determines whether your global income will be taxed here.
For expats, planning ahead, leveraging DTAA benefits, and staying compliant with documentation can save significant stress and money.
At Adopremium, we not only offer premium serviced apartments tailored for expats but also provide reliable resources to simplify your transition to India.
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