"India gives you split-year residence when you move abroad": What ITA 2025 actually says

Here is a belief that costs people real money every single year. Someone moves to Dubai or London in October, halfway through the Indian tax year, and assumes their Indian tax obligations neatly split in two: resident until they left, non-resident after. "My salary abroad from October onwards is outside India's net," they tell themselves. It feels obvious. It is also wrong, and the Income Tax Act, 2025 (ITA 2025), has done nothing to make it right.

India does not have a split-year residence concept. It never did under the Income Tax Act, 1961, and it does not under ITA 2025 either. You are either a resident or a non-resident for the entire tax year, decided by a single set of day-count tests applied to the whole twelve months. The country you happened to be sitting in on any given date does not, by itself, change that. Misunderstanding this is one of the most expensive mistakes a mid-year mover makes, because a resident is taxed on worldwide income while a non-resident is taxed only on Indian income — and the rule decides which one you are for all 365 days at once.

What the law actually says

Residential status in India is governed by Section 6, and this is one of the rare provisions where the section number is identical in both Acts — Section 6 of ITA 1961 and Section 6 of ITA 2025 carry the same residency tests. The only headline change is vocabulary: ITA 2025 replaces the old "Previous Year" and "Assessment Year" pairing with a single "Tax Year" running 1 April to 31 March.

Under Section 6, you are a resident of India in a Tax Year if you satisfy either of two basic tests:

• You are in India for 182 days or more during the Tax Year; or
• You are in India for 60 days or more during the Tax Year and 365 days or more across the four preceding Tax Years.

For Indian citizens and persons of Indian origin who live abroad and visit India, that 60-day threshold is relaxed to 182 days — the rule that protects most genuine NRIs. And for an Indian citizen with Indian income above ₹15 lakh who is not liable to tax in any other country, a special 120-day test plus the "deemed resident" rule under Section 6 can apply.

Notice what every one of these tests has in common: they count days across the whole Tax Year and ask a yes/no question about your status for that entire year. There is no clause that says "resident for the first six months, non-resident for the last six." The phrase "split-year residence" does not appear anywhere in Section 6, in either Act. Countries like the United Kingdom genuinely operate a Statutory Residence Test with split-year treatment — India borrowed the day-counting idea but never the split. People who have lived in the UK often import the assumption. It does not survive contact with Indian law.

So if you leave India in October after spending, say, 190 days here, you have crossed 182 days. You are a resident for the full Tax Year — including the months you were physically in Dubai. Your Dubai salary for October to March is, in principle, part of your worldwide income that year (subject to RNOR relief and treaty relief, discussed below).

Practical implications for NRIs

This is where the abstract rule turns into a number on a tax notice. Three scenarios show how it actually plays out.

Scenario 1 — The October mover who stays a resident. Priya moves to Dubai on 5 October 2026 for a new job. Between 1 April and 4 October she was in India for 188 days. Because 188 is above 182, Priya is a resident for Tax Year 2026-27. Her Dubai salary from October to March — even though the UAE levies no personal income tax and the money never touches India — forms part of her worldwide income for that year. She cannot simply ignore it because she "became an NRI in October." There was no October switch.

Scenario 2 — The same mover, but RNOR saves her. Here is the relief most people miss. Even when you are a resident, you may qualify as Resident but Not Ordinarily Resident (RNOR) under Section 6, and an RNOR is not taxed on foreign income unless it is derived from a business controlled from India or a profession set up in India. Priya, returning from years abroad or transitioning out, will often be RNOR in her transition year. If so, her Dubai salary is effectively outside the Indian net — not because of any split-year rule, but because RNOR status exempts foreign-sourced income. The mechanism matters: get the reason right and you claim the relief correctly on your return. Get it wrong — call it "split-year" — and you may either over-report or fail to substantiate the exemption when questioned.

Scenario 3 — The mover who genuinely becomes a non-resident. Rahul leaves India on 20 May 2026 and spends only 49 days in India that Tax Year. He is below every threshold, so he is a non-resident for the entire Tax Year 2026-27, including the April-May weeks he was still living and earning in India. His Indian salary for those weeks remains taxable because it was earned in India (Indian-source income is taxable regardless of residential status), but his global income for the rest of the year is outside India's reach. Again — the status applied to the whole year; the source rule, not a calendar split, decided what was taxable.

The thread running through all three: residential status is a whole-year verdict; what is taxable is then decided separately by the source of each income and by any DTAA relief. Conflating the two is the root error behind "split-year."

There is one more trap specific to high earners. An Indian citizen leaving for work abroad gets the generous 182-day relaxation, but the "deemed resident" provision in Section 6 can still pull in an Indian citizen whose Indian income exceeds ₹15 lakh in the Tax Year and who is not liable to tax in any other country by reason of domicile or residence. The UAE, with no personal income tax, is exactly the kind of place where someone can find themselves "not liable to tax anywhere" — and therefore deemed a resident (specifically an RNOR) of India for that year regardless of how few days they spent here. The point is not to alarm anyone; it is that the question of which status you hold is genuinely a year-level legal test with several moving parts, never a simple "the day I boarded the flight" cutoff. A mid-year mover who assumes a split has not even started the real analysis.

It is also worth being precise about what "Indian income" means for the weeks before you leave. Salary credited for work performed in India, rent from Indian property, profit on the sale of Indian shares or mutual funds, and interest on an NRO account are all Indian-source. They remain taxable in India in the year you move whether you end up resident or non-resident — the source rule is independent of the day count. What changes with status is only the treatment of your foreign income.

Step-by-step: what to do when you move mid-year

• Count your India days for the full Tax Year first. Add up every day of physical presence in India from 1 April to 31 March of the year you move. Day of arrival and day of departure both generally count as days in India. Do not stop counting at your departure date — the whole year matters.
• Apply the Section 6 tests to that single total. Check the 182-day test, then the 60/120-day-plus-365 test with the NRI relaxations. This gives you one answer for the entire year: resident or non-resident.
• If resident, test for RNOR. Check whether you were a non-resident in 9 of the 10 preceding Tax Years, or in India for 729 days or fewer in the preceding 7 Tax Years. If either holds, you are RNOR — and your foreign income is largely exempt. This is the real relief for mid-year movers, and it must be claimed deliberately.
• Separate Indian-source income from foreign-source income. Salary for work physically done in India, Indian rent, Indian capital gains, and interest on NRO accounts are Indian-source and taxable whatever your status. Foreign salary is only in play if you are a full resident (not RNOR).
• Apply DTAA relief where double taxation arises. If you are a resident for the Indian year but also taxed abroad on the same income, the relevant Double Taxation Avoidance Agreement and its tie-breaker rules decide who taxes what. To claim treaty benefits you will typically need Form 10F and a Tax Residency Certificate from the other country.
• File ITR-2 and reconcile your TDS. Report using the schedule of residential status, and reconcile every TDS credit against Form 26AS (now Form 168 under ITA 2025). For remittances abroad, remember Form 15CA (now Form 145 under ITA 2025) and, where a CA certificate is required, Form 15CB (now Form 146 under ITA 2025).

Closing

A mid-year move is exactly the moment where a wrong assumption compounds — over a full year of foreign earnings, the gap between "split-year" thinking and the correct RNOR or non-resident treatment can run into lakhs, and an incorrectly filed return invites a notice. For your specific situation, book a consultation at harunraaj.com.

See Also

• US-India DTAA Article 15 vs Article 16: What ITA 2025 Actually Says About Your Salary
• Form 10F is not an email attachment: what ITA 2025 actually requires NRIs to file online
• "My UAE residency exempts my Indian income": What ITA 2025 actually says

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