Are you an NRI? The 182-day rule, explained

Test one: your bank accounts

India’s foreign exchange law (FEMA) looks at your intention. If you leave India to take up a job, study, or live abroad for an uncertain period, you’re a “person resident outside India” for banking from the day you leave, even if you’ve only been gone a week.

That’s why your old resident savings account needs to become an NRO account as soon as you move, not after 182 days. We walk through that in NRE or NRO?

Test two: your income tax

India’s income tax rules count the days you’re physically in India during its tax year, which runs from April 1 to March 31. As a general rule, you’re a tax resident of India for that year if either of these is true:

1. you were in India for 182 days or more; or
2. you were in India for 60 days or more that year, and for 365 days or more over the four years before it.

For most Indians living in Canada, the second rule is switched off:

• In the year you leave for a job abroad, only the 182-day rule applies.
• When you visit India as an Indian citizen or a person of Indian origin, the 60 days become 182 days, so again only the 182-day line matters.

The exception: if your income from India (not counting foreign income) is more than ₹15 lakh in the year, the 60 days become 120 days instead. Spend 120 days or more in India that year, with 365 days over the previous four, and you can become a resident. In that case you’re treated as “resident but not ordinarily resident”, which still keeps most foreign income out of India’s tax net.

There’s also a “deemed resident” rule for Indian citizens with more than ₹15 lakh of Indian income who aren’t taxed anywhere else. If you’re a tax resident of Canada, it doesn’t apply to you.

Why it matters

As a non-resident, India taxes only your income from India, such as NRO interest, rent or capital gains there. NRE and FCNR interest stays tax-free. Cross into being a resident and India can start looking at far more of your income, and some of those NRI benefits stop. Most of us never get close to 182 days, but long visits add up: a wedding season, caring for a parent, or working remotely from India for a few months.

Canada has its own test

The CRA doesn’t count days the same way. If you live in Canada, with a home, a job and family here, you’re a tax resident of Canada and report your income from everywhere. Spending a few months in India doesn’t change that by itself. It’s possible, though rare, to be a resident of both countries in the same year; the India–Canada tax treaty has tie-breaker rules for that, and it’s worth talking to a professional if you’re close.

A simple habit

1. Note the dates every time you land in or leave India. Your passport stamps and boarding passes are your records.
2. Add up the days from April 1 each year, and keep an eye on the total before you plan a long trip.
3. If your Indian income is over ₹15 lakh, watch the 120-day mark instead.