If you're an NRI who visits India for extended periods, you know you need to count your days. What you may not know is that there are now two different day-count thresholds, and the wrong assumption about which one applies to you can trigger resident status before you expect it.
The 182-day rule has been part of Indian tax law for decades. The 120-day rule came in through Finance Act 2020, and it quietly changed the residency math for high-income Indian citizens and persons of Indian origin. I work through both rules side by side below, walk you through exactly who falls under each one, and give you a clear framework to figure out which threshold governs your RNOR status in India.
What is the 182-day rule?
The 182-day rule under Section 6(1)(a) of the Income Tax Act is the primary residency test for all individuals in India. If you stay in India for 182 days or more during a financial year (April 1 to March 31), you are classified as a resident. There is no income condition, no citizenship requirement, and no look-back period needed. One number, one answer.
Hitting 182 days makes you a resident. Whether you are then classified as an ordinary resident (ROR) or Resident but Not Ordinarily Resident (RNOR) depends on your residency history under Section 6(6). If you were a non-resident for 9 of the preceding 10 financial years, or spent 729 days or fewer in India in the preceding 7 years, you qualify as RNOR. If not, you are an ordinary resident and your worldwide income becomes taxable in India. For a full breakdown of the tax treatment under RNOR, see the detailed article on RNOR tax rules and benefits.
What is the 120-day rule?
The 120-day rule was introduced by Finance Act 2020, effective from Assessment Year 2021-22. It amended the exception to the 60-day test in Section 6(1)(c) of the Income Tax Act (via Explanation 1, clause (c)) for a specific group. If you are an Indian citizen or a PIO and your total Indian income, excluding income from foreign sources, exceeds ₹15 lakh in the financial year, a stay of 120 or more days in India combined with 365 or more days in India across the preceding four financial years makes you a resident.
Crucially, this path directly creates RNOR status. Persons who become resident under the 120-day rule are treated as RNOR, not ordinary residents. Their foreign income stays exempt from Indian tax, they do not need to disclose foreign assets in Schedule FA, and NRE and FCNR account interest remains tax-free. If you hold US stocks, RNOR status also opens up a cost basis reset strategy worth planning for. This makes the 120-day rule both a lower trigger and a different outcome compared to the 182-day threshold.
| Feature | 182-day rule | 120-day rule |
|---|---|---|
| Who it applies to | All individuals: citizens, PIOs, foreign nationals, NRIs | Indian citizens and PIOs only |
| Indian citizenship or PIO status required | No | Yes |
| Indian income threshold | None | Indian income (excl. foreign sources) must exceed ₹15 lakh |
| Days in current financial year required | 182 or more | 120 or more |
| Preceding period condition | None | 365 or more days in India across the preceding 4 financial years |
| Section of Income Tax Act | Section 6(1)(a) | Exception to Section 6(1)(c) (Explanation 1, clause (c)), amended by Finance Act 2020 |
| Effective from | Income Tax Act 1961 (original) | Assessment Year 2021-22 (FY 2020-21 onwards) |
| Resulting residential status | Resident — ROR or RNOR depending on Section 6(6) eligibility | RNOR specifically |
| Can you become an ordinary resident under this rule alone? | Yes, if you don't meet RNOR conditions under Section 6(6) | No — this provision creates RNOR status only |
| Foreign income taxable in India | Only if you become ordinary resident | No (RNOR status: foreign income exempt) |
| Foreign asset disclosure (Schedule FA in ITR) | Required if ordinary resident; not required if RNOR | Not required |
| NRE account interest taxability | Tax-exempt while RNOR | Tax-exempt as RNOR |
| FCNR account interest taxability | Tax-exempt while RNOR | Tax-exempt as RNOR |
| Safe day limit to stay non-resident | Up to 181 days per financial year, but only if you have not already spent 365 or more days in India across the preceding 4 financial years | Up to 119 days per financial year (when Indian income exceeds ₹15L and preceding 4-year condition is met) |
| Primary risk for NRIs | Overstaying and triggering ordinary resident status, making foreign income taxable | Earning over ₹15L from India and not realizing a shorter stay triggers RNOR |
| ITR form applicable | ITR-2 (for resident with foreign income) | ITR-2 (filed as RNOR) |
The section numbers above are from the Income Tax Act, 1961. From Financial Year 2026-27, the Income-tax Act, 2025 replaces it and carries these same residency tests forward under renumbered provisions: the 182-day test moves to Section 6(2)(a), the 60-day and 365-day test to Section 6(2)(b), the 120-day substitution for citizens and PIOs to Section 6(5), and the RNOR test to Section 6(6). The day counts and conditions themselves are unchanged, only the section labels differ.
120-day rule vs 182-day rule: which one applies to you?
The rule governing your RNOR status in India depends on two questions: are you an Indian citizen or PIO, and has your Indian income exceeded ₹15 lakh this financial year? Your answers determine which threshold you track.
The 182-day rule applies if:
- You are a foreign national and not an Indian citizen or PIO, and you have spent fewer than 365 days in India across the preceding four financial years
- You are an Indian citizen or PIO but your total Indian income is ₹15 lakh or below this year
- You want to know the absolute outer limit that applies once the shorter 60-day test (below) does not apply to you
- You are tracking residency for a family member who does not meet the income condition
Foreign nationals face a second test too. Under Section 6(1)(c) of the Income Tax Act, anyone (other than the citizen or PIO visitors covered by the 120-day rule) who is in India for 60 days or more in the financial year and 365 days or more across the preceding four financial years is also resident, regardless of the 182-day count. A foreign national who travels to India often enough to clear 365 days over four years can become resident at just 60 days in the current year, well short of 182. The 181-day safe limit only holds once this 60-day test is out of the picture.
The 120-day rule applies if:
- You are an Indian citizen or PIO
- Your Indian income (salary earned in India, rent from Indian property, NRO account interest, dividends from Indian companies, capital gains from Indian assets) exceeded ₹15 lakh this financial year
- You have spent 365 or more days in India across the preceding four financial years
- All three conditions above are true at the same time
Can you be subject to both?
Yes, but only in one direction. If the 120-day rule applies to you and you cross 120 days, you become RNOR for that year. If you then also stay past 182 days in the same year, the 182-day threshold overtakes. At that point, your final status, RNOR or ordinary resident, depends on your Section 6(6) history: whether you were non-resident for 9 of the preceding 10 financial years, or spent fewer than 729 days in India in the preceding 7 years. Once you know which status you will land in, the next planning question is how long your RNOR window lasts and what to do inside it, covered in our guide on planning your RNOR window after returning to India.
Worked example — Priya:
Priya is an Indian citizen living in the US. She earns ₹18 lakh from NRO account interest and rental income from an apartment in Chennai. Over the past four financial years, she visited India each summer and winter, accumulating 380 days in total. This year, she plans to be in India for 130 days.
Under the 182-day rule alone, Priya looks safe. She is well below 182 days. But the 120-day rule applies to her: she is an Indian citizen, her Indian income exceeds ₹15 lakh, and she has already met the preceding 4-year condition. At day 120, she becomes RNOR for that financial year. Her foreign income remains exempt, but her Indian income is taxable at resident rates from that point. If Priya had been planning her trips based on the 182-day limit, she needs to revise that calendar immediately.
Worked example — Rahul:
Rahul is an Indian citizen living in Dubai. He earns ₹11 lakh from Indian fixed deposits and mutual fund dividends. He sometimes stays in India for up to 140 days a year visiting family. Because his Indian income is below ₹15 lakh, the 120-day rule does not apply to him. His only threshold is 182 days, and he can stay up to 181 days without triggering residency.
What about Section 6(1A)?
There is a third rule that sits alongside the 120-day vs 182-day comparison and is worth understanding. Section 6(1A), also introduced by Finance Act 2020, creates a category called deemed resident. An Indian citizen whose Indian income exceeds ₹15 lakh and who is not liable to pay tax in any other country due to domicile or residence is treated as a deemed resident of India, regardless of how many days they spend there.
This rule does not depend on day counts at all. It is about tax liability in another country. If you are an Indian citizen working in a zero-tax jurisdiction, or a country where your specific income is exempt under a treaty, and your Indian income crosses ₹15 lakh, you may be a deemed resident without crossing any day-count threshold. The April 2026 tax residency rule changes brought this provision into focus for more NRIs than before. Deemed residents under Section 6(1A) are treated as RNOR, not ordinary residents. Under the Income-tax Act, 2025 (effective FY 2026-27), this provision carries forward as Section 6(7), with the same ₹15 lakh and no-tax-elsewhere conditions.
How to count your 182 or 120 days
Every threshold in this article runs on the Indian financial year, April 1 to March 31, which the Income Tax Act calls the "previous year." Count every calendar day you are physically present in India during that window toward your 182-day or 120-day total. The 365-day condition under the 60-day and 120-day rules is cumulative, not continuous: add up your days in India across all four financial years immediately before the current one. The RNOR lookback is wider still, covering the seven financial years before the current one for the 729-day test.
When you file your return, ITR-2's residential status schedule asks for exactly these figures: your total period of stay in India during the previous year, in days, and your total period of stay in India during the preceding four years, in days (citizens and PIOs are asked separately about the preceding seven years for the RNOR test). Keep a dated travel log, boarding passes, passport stamps, or immigration records are enough, and total each financial year separately so you can drop the right numbers straight into the form. If a stay straddles a threshold by only a few days, confirm the exact count with a CPA before you file.
Frequently asked questions
What exactly counts as "Indian income" for the ₹15 lakh test under the 120-day rule?
Indian income means any income that accrues, arises, or is received in India. This includes salary for services performed in India, rent from Indian property, interest on NRO accounts and Indian fixed deposits, dividends from Indian companies, and capital gains from selling Indian assets such as property, shares, or mutual funds. Income from foreign sources - including NRE account interest, FCNR account interest, and salary credited for services performed outside India, is excluded from the ₹15 lakh calculation. If your combined Indian-source income from all these categories crosses ₹15 lakh in the financial year, the 120-day rule is active for you.
I have heard about a 183-day rule. Is India's threshold actually 182 or 183 days?
India's threshold is 182 days, not 183. The 183-day figure comes from the US Substantial Presence Test (SPT), which uses a weighted three-year formula to determine US tax residency. These are two separate rules from two separate countries.
For Indian residential status under Section 6(1)(a) of the Income Tax Act, the threshold has always been 182 days. If you spend exactly 182 days in India during a financial year, you are a resident for that year.
If I trigger the 120-day rule, am I automatically RNOR or could I become an ordinary resident?
Triggering the 120-day rule makes you RNOR specifically, not an ordinary resident. This is the key difference from the 182-day rule, where you first become "resident" and Section 6(6) then determines whether you are RNOR or ordinary resident based on your residency history. Under the 120-day path, RNOR is the direct outcome. Foreign income stays exempt, foreign assets do not need to be disclosed in Schedule FA and FSI in your ITR, and you are not taxed on your global income for that year.
I accidentally stayed in India for 125 days this year and my Indian income is ₹16 lakh. Am I now a full resident?
No. Under the 120-day rule, you become RNOR for that year, not an ordinary resident. Your foreign income stays tax-free in India. You do need to file ITR-2 as RNOR, pay tax on your Indian income at standard resident rates, and update your bank KYC to reflect your change in status. But your foreign portfolio, NRE account interest, and overseas salary are not taxable in India for that year.
If you also crossed 182 days, your final status would depend on your Section 6(6) eligibility: whether you were non-resident for 9 of the preceding 10 financial years, or spent fewer than 729 days in India in the preceding 7.
Does becoming RNOR under the 120-day rule affect my US tax obligations?
No. RNOR is an Indian tax classification and has no effect on your US filing requirements. If you are a US citizen, green card holder, or US tax resident, you continue to file US federal taxes and report worldwide income to the IRS.
Your Indian RNOR status affects how much Indian tax you owe on your Indian income, which may generate foreign tax credits on your US return. The US-India DTAA governs how both countries treat your income to prevent double taxation, but Indian RNOR classification alone does not reduce or eliminate any US filing requirement.