The New Income Tax Act Is Here: What Actually Changes for NRIs from April 2026

From 1 April 2026, India’s income tax framework formally moved from the old Income Tax Act, 1961 to the new Income Tax Act, 2025. One of the more practical changes buried in the transition is the replacement of the old “Financial Year / Assessment Year” pair with a single, simpler “Tax Year” concept. For Non-Resident Indians, though, the more consequential changes sit in the residency rules themselves.

The 120-day rule replaces the 60-day rule for some NRIs

The basic 182-day physical-presence test for residency is unchanged. What’s changed is the tighter alternative test that applies to NRIs with substantial Indian-sourced income. Previously, an NRI earning above a threshold who spent 60 days or more in India in a year could be pulled into “Resident but Not Ordinarily Resident” (RNOR) status. That threshold now moves to 120 days for NRIs with ₹15 lakh or more in Indian income, giving genuinely non-resident individuals more breathing room to visit family or attend to property and business matters in India without inadvertently tipping into RNOR status.

A new “deemed residency” trap

Separately, Indian citizens who earn ₹15 lakh or more from Indian sources and are not liable to tax in any other country can be treated as deemed residents of India, regardless of how many days (even zero) they actually spend here in that year. This is aimed squarely at individuals who structure their affairs to avoid tax residency anywhere. If that description could apply to you or a family member, this is worth a specific review rather than assuming the 182-day rule is the only test that matters.

Smaller but real wins on remittances and property sales

• Tax Collected at Source on education and medical remittances under the Liberalised Remittance Scheme has been cut from 5% to 2%, and TCS on overseas tour packages has also been reduced, a modest but genuine reduction in upfront cash flow drag for families remitting funds for children studying abroad.
• From 1 October 2026, a resident buyer purchasing property from an NRI seller no longer needs to obtain a TAN purely for that transaction, a small compliance simplification that has tripped up many genuine property deals in the past.

None of these changes are dramatic on their own, but together they shift the planning conversation for NRIs from “how many days can I safely spend in India” to “what does my actual Indian income look like, and is it being taxed properly somewhere.” That’s a more substantive question, and one worth answering before the next visit home, not after.

General commentary based on publicly available information as of June 2026. Residency and tax-year transition rules have specific carve-outs and effective dates. Confirm your own position with a Chartered Accountant before relying on any of this.