INDIA Law and Practice Contributed by: Rishabh Shroff, Kunal Savani and Chirag Shah, Cyril Amarchand Mangaldas
estate. In India, domicile has an impact on the succes- sion to movable property. As in many countries, domi- cile in India depends on duration of stay and intention. Indian courts follow the domicile principle wherein law of deceased’s domicile governs succession to mov- able assets, while immovable property is governed by the lex situs, or the law of the jurisdiction where the property is located. 2.2 Income Tax Residency All direct tax-related aspects fall under the Income Tax Act, 1961 and/ or the Income Tax Act 2025 (ITA 2025), as may be applicable, and the rules made thereun- der, as may be amended, re-enacted or replaced from time to time (and any successor provisions) together with all applicable by-laws, rules, regulations, orders, ordinances, policies and directions issued thereunder, (collectively referred as ITA). As per the ITA, individuals are subject to tax in India based on their residential status in India. Individuals can be classified as: • residents; • non-residents; or • resident but not ordinarily resident (RNOR). An individual is considered to be tax-resident in India in any year if: • the individual stays in India for a period of 182 days or more in a financial year; or • the individual stays in India for a period of 60 days or more in a financial year and 365 days or more during the preceding four financial years. In the case of an Indian citizen or persons of Indian origin (PIO) who visits India during the year, or an Indi- an citizen who leaves India in any financial year as a crew member of an Indian ship or for the purpose of employment outside India, the requirement of having to spend 60 days or more is taken as 182 days. However, in the case of an Indian citizen or a PIO whose total income (excluding foreign-source income), exceeds INR1.5 million during the relevant
financial year, the period of 182 days is reduced to 120 days. Additionally, an Indian citizen whose total income (excluding foreign-source income), exceeds INR1.5 million during the relevant financial year, is deemed to be a resident of India if they are not “liable to tax” in any other country by reason of domicile or residence or any other criteria of a similar nature. A tax resident of India is considered to be RNOR if such a taxpayer: • has been a non-resident in nine out of the ten financial years preceding the relevant financial year; or • has not been in India for an overall period of 729 days during seven financial years preceding the relevant financial year. Further, if an Indian citizen or PIO becomes a resident of India upon exceeding 120 days’ stay in India (but does not stay in India for more than 182 days), then such person would also qualify as a RNOR. Similarly, where an Indian citizen becomes a resident under the deemed residency rules, then such person would also qualify as a RNOR. While Indian residents are typically taxed on their global income, non-residents are liable to pay income tax only on India-sourced income. Any income which is received or deemed to be received in India or has accrued or arisen or is deemed to accrue or arise in India shall be considered as India-sourced income. RNORs are taxed on their India-sourced income and such foreign income which is derived from a business controlled, or a profession set up, in India. Recently, the Government of India has notified the ITA 2025, to repeal and replace the existing IT Act, with effect from 1 April 2026. The ITA 2025 does not introduce any policy changes and has primarily been enacted as a simplified, concise and reader-friend- ly piece of legislation, which does not introduce or change the provisions concerning the tax residency of individuals.
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