The Institute of Chartered Accountants of India (ICAI), through its International Taxation Committee, has released the July 2026 edition of the “Handbook on Residential Status for NRIs – Tax and FEMA Aspects.” The publication provides a consolidated reference on residential-status provisions under Indian income-tax law and the Foreign Exchange Management Act, 1999 (FEMA).
The handbook addresses the impact of the Income-tax Act, 2025, which applies from 1 April 2026 for Tax Year 2026-27. It explains the transition from the Income-tax Act, 1961 and notes that matters relating to earlier periods remain governed by the earlier legislation under the repeal and savings framework, including Section 536 of the new Act.
A significant portion of the handbook deals with Section 6 of the Income-tax Act, 2025, including the applicable residential-status tests. It covers the 182-day test, the 60-day/365-day test, and specific rules concerning Indian citizens departing India for employment, ship crew members, visiting Indian citizens and Persons of Indian Origin (PIOs). The publication also discusses the 120-day threshold applicable in specified circumstances where income, excluding income from foreign sources, exceeds ₹15 lakh.
The handbook explains the tax implications of the three principal residential categories: Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (NOR), and Non-Resident (NR). It outlines the differing scope of taxation applicable to each category, particularly in relation to Indian-source and foreign-source income.
ICAI has also highlighted the distinction between income-tax residency and FEMA residency. While income-tax residential status is largely determined through statutory stay and day-count requirements, FEMA residency involves considerations including the purpose and intention of an individual's stay in or departure from India. Accordingly, an individual's status under the two legal frameworks may differ for the same period.
The publication further covers Double Taxation Avoidance Agreements (DTAAs), treaty tie-breaker provisions, Tax Residency Certificates (TRCs), foreign tax credit, expatriate taxation, global mobility, transfer pricing and relevant judicial precedents. It also provides an overview of residency frameworks in countries including the United Kingdom, United States, United Arab Emirates, Singapore, Canada, Australia and the Netherlands.
A dedicated section addresses FEMA-related considerations, while practical case studies illustrate situations involving NRIs, returning Indians and internationally mobile individuals. The handbook also discusses Notification No. 70/2015 and Rule 126 of the Income-tax Rules, 1962, concerning the computation of stay in India for specified ship-crew cases.
Structured primarily in a question-and-answer format, the handbook combines statutory references, comparative explanations, judicial decisions and practical examples. It is intended to assist chartered accountants, tax professionals, businesses, expatriates and NRIs in understanding residential-status rules and related tax and foreign-exchange compliance requirements. CASansaar