No change has been made in the basic conditions for determining individual residency. Under section 6 of the Income Tax Act, 2025, an individual continues to be treated as tax -resident if he stays in India for 182 days or more in the relevant tax year, or for 60 days or more in that year coupled with 365 days or more in the preceding four years. These conditions are identical to section 6(1) of the Income Tax Act, 1961.

Yes, the special relaxation continues without any change. If a citizen of India leaves the country for employment outside India  or as a crew member of an Indian ship, he will be regarded as a resident only if his stay in India is 182 days or more during the relevant tax year. In such cases, the condition of stay of 60 days in the relevant tax year 
along with 365 days in the four pr eceding tax years does not apply.

No. The rule remains the same under the Income Tax Act, 2025. Visiting Indian citizen or person of Indian origin shall be treated as ‘resident’  in a tax year  if he is in India for a total period of more than 182 days in that tax year. For persons earning more than Rs. 15 lakh  (other than the income from foreign sources)  during the tax year, alternate condition u/s 6(2)(b) of the new Act also applies with modification that ‘60 days’ in the said section is to be read as ‘120 days’  along with 365  days or more in the four years preceding such tax year.

As per section 6(1A) of the Income Tax Act, 1961, a citizen of India having total income exceeding Rs 15 lakh (other than income from foreign sources), and not liable to tax in any other country by reason of domicile , residence  or similar criteria, is considered to be deemed resident. This deemed residency rule has been retained in the Income Tax Act, 2025.Section 6(7) of the Income Tax Act, 2025 is similar to section 6(1A) of the Income Tax Act, 1961.  In this scenario, stay of number of days in India is insignificant.

There is no modification in the NOR criteria. An individual remains not ordinarily resident  in a tax year  if he was non -resident in nine out of ten preceding years or stayed in India for 729 days or less in the preceding seven years. Section 6(13) of the Income Tax Act, 2025 is similar to section 6(6) of the Income Tax Act, 1961.

No, the residency test for a company has not changed under the Income Tax Act, 2025. Under both the Income Tax Act, 1961 and the Income Tax Act, 2025, a company is regarded as resident in India if it is an Indian company  or if its Place of Effective Management (POEM) during the relevant year is in India.

Residential status for any tax year beginning before 1 April 2026 will continue to be determined under section 6 of the Income Tax Act, 1961, even if the assessment or reassessment takes place after the commencement of the Income Tax Act, 2025. This flows from the savings clause which preserves the applicability of the 1961 Act for all proceedings relating to earlier tax years.

Even if notice for reassessment for AY 2025 -26 is issued after 1 April 2026, the residential status must be determined strictly under section 6 of the Income Tax Act, 1961 because the tax year involved begins before 1 April 2026. The section 536 of the new Act expressly provides that proceedings relating to such years shall be carried out under the old Act as if the new act  had not been enacted. Thus, the Income Tax Act, 2025 has no application in determining tax -residency for any tax year beginning be fore 1 April 2026.

Residential status under section 6 of the Income Tax Act, 2025 will apply only for tax years beginning on or after 1 April 2026. For such years, the determination of resident, non -resident, deemed resident and not ordinarily resident will be governed entirely by the new Act. There is no overlapping application for the same tax year. The dividing line is the commencement date of the tax year, not the date of proceedings.

Residential status is assessed separately for each tax year. Where an individual’s stay in India extends across financial years 2025 –26 and 2026 –27, the tax residency for FY 2025 –26 (AY 2026 –27) shall be determined based on the period of stay up to 31 March 2026, in accordance with the provisions of the Income Tax Act, 1961.
For FY 2026 –27, residential status shall be determined under the provisions of the Income Tax Act, 2025, and the period of stay from 1 April 2026 onwards will be considered for this purpose. However, while applying the “60 days (stay in the relevant tax year) + 365 days (stay in the preceding four tax years)” test, the stay during FY 2025 –26 and earlier years shall also be taken into account, as relevant.

No, the continuity -based tests such as “nine out of ten preceding years” or “729 days in seven preceding years” will continue to look back to earlier years even if those years were governed by the Income Tax Act, 1961. When applying section 6 of the Income-tax Act, 2025 for tax year beginning on or after 01.04.26, the preceding years may include years under the repealed Act.

For tax years prior to 1 April 2026, deemed residency of Indian citizens not liable to tax elsewhere and having income exceeding Rs 15 lakh will be governed by section 6(1A) of the Income Tax Act, 1961. For tax years beginning on or after 1 April 2026, the corresponding deemed residency provision in section 6(7) of the Income Tax Act, 2025 will apply. The repeal clause ensures that deemed residency for earlier years cannot be tested under the new provision.

No, residential status once determined for a tax year under the Income Tax Act, 1961 can only be reopened in accordance with the provisions of that Act.

No. The core features of the special NRI taxation regime remain unchanged. 
Under the Income Tax Act, 1961: 
• Section 115D disallowed deduction of any expenditure or allowance while computing investment income of a Non -resident Indian (NRI) and restricted Chapter VI -A deductions where the gross total income consisted of such income.
• Section 115E provided for concessional tax rates of 20% on investment income and 10%/ 12.5% on long -term capital gains depending on the date of transfer.
• Section 115F granted exemption from capital gains where the net consideration from transfer of foreign exchange assets was reinvested in specified assets within six months, subject to a proportional exemption formula and a three -year lock-in period, along with a claw -back provision on premature transfer.
 
The corresponding Sections 213, 214 and 215 of the Income Tax Act, 2025 substantially reproduce these provisions. Thus, the restriction on deductions, concessional tax treatment, reinvestment exemption (including the formula A = B × C / D), lock -in conditi on, and claw -back mechanism have been retained under the new Act without material alteration.

Yes. Section 115G of the Income Tax Act, 1961 exempted NRIs from filing a return where total income consisted only of investment income or long -term capital gains or both, subject to TDS. Section 216 of the Income Tax Act, 2025 retains this relief in similar terms, maintaining the compliance simplification approach. The conditions —limited income category and proper tax deduction at source —remain the same.

Section 115H of the Income Tax Act, 1961 allowed an NRI who became resident to continue enjoying concessional taxation on certain foreign exchange assets (other than shares) upon filing a declaration. Section 217 of the Income Tax Act, 2025 preserves this  continuation benefit. The requirement of furnishing a declaration along with the return and continuation until transfer or conversion of asset remains intact. Accordingly, continuity of benefits has not been withdrawn.

Section 115 -I of the Income Tax Act, 1961 allowed an NRI to elect not to be governed by the special concessional regime for any assessment year and instead be taxed under normal provisions. The Income Tax Act, 2025 retains this elective mechanism allowing the assessee to declare in the return that the special provisions shall not apply. Upon such declaration, taxation shall be under the general provisions of the Act. The voluntary nature of th e special regime therefore remains intact.

Yes, the repeal and saving clause preserves elections validly exercised under the Income Tax Act, 1961 for the relevant assessment year. Since the option under Section 115-I was year -specific, its effect continues for that particular year even after repeal . For tax years governed by the Income Tax Act, 2025, the corresponding opt -out provision will apply prospectively . The repeal does not retrospectively invalidate an option previously exercised. Thus, each tax year shall be examined independently based on the governing statute applicable to that year and the option chosen by the assessee.

If the new asset is transferred after 01.04.2026 but within the three -year lock -in period, the claw -back liability arises under Section 115F(2) of the Income Tax Act, 1961, as that is the provision granting the original exemption. The repeal and saving clause of the Income Tax Act, 2025 preserves the exemption’s liability, keeping its rights and conditions governed by the 1961 Act. However, the year of taxability shall be the tax year in which the new asset is transferred. If this occurs after 01.04.2026, the transfer falls under the 2025 Act, and assessment for that year will follow its provisions.

Where an NRI had filed a declaration under Section 115H of the Income Tax Act, 1961 to continue concessional taxation after becoming resident, such declaration is a valid declaration for the purposes of the new Act as provided in section 536(2)(f) of the Income Tax Act, 2025.

Assessments relating to tax years governed by the Income Tax Act, 1961 will continue under that Act by virtue of the saving clause. The repeal does not invalidate completed proceedings or ongoing reassessment actions initiated under the provisions of the o ld Act. Therefore, disputes involving concessional rates, denial of deduction under Section 115D, or exemption under Section 115F will be adjudicated under the old Act for those years. The new Act applies only prospectively to tax years beginning on or after 1st April, 2026.

No, assets acquired as “foreign exchange assets” under Section 115C of the Income Tax Act, 1961 retain their character for the purposes of taxation in respect of earlier years. Since the Income Tax Act, 2025 adopts similar definitions under Section 212, t here is no discontinuity in classification. The saving clause ensures that characterization of assets and tax treatment determined under the old law remains valid.

Section 10(4)(ii) of the Income Tax Act, 1961 exempted interest earned by an individual from a Non -Resident (External) Account (NRE) maintained in accordance with FEMA, provided the individual is a “person resident outside India  as defined in FEMA ” or is permitted by RBI  to maintain such an account . In the Income Tax Act, 2025, this exemption has been kept in Schedule IV. The substantive conditions remain the same —eligibility continues to depend on non -resident status under FEMA and RBI permission. There is no withdrawal or dilution of this exemption.

Under the Income Tax Act, 1961, the exemption under Section 10(4)(ii) of the old Act was based on the FEMA definition of “person resident outside India” rather than tax residency under the Income Tax Act. The Income Tax Act, 2025 continues to maintain this distinction.

Under the first proviso to Section 48 of the Income Tax Act, 1961, Non -resident computing capital gains on transfer of shares or debentures of an Indian company were permitted to compute gains in the same foreign currency in which the investment was made, and reconvert the net gain into Indian currency . This neutralized exchange fluctuation impact. Under the Income Tax Act, 2025, Section 72 retains this mechanism for non -residents.