India Implements Income-tax Act 2025: Key Updates for NRIs

India’s Income-tax Act 2025 became effective on April 1, 2026, applying to the 2026-27 fiscal year. While the law reorganizes tax administration through new forms and section numbering, officials confirmed that the basic conditions for determining individual residency remain the same.

Under the new statute, the term 'Previous Year' has been replaced with 'Tax Year.' Section 536 ensures that these changes are not applied retroactively, meaning the Income-tax Act 1961 continues to govern assessments for the 2025-26 fiscal year.

The legislation maintains existing residency thresholds, including the 182-day rule and the alternative 60-day test for general residency. Specific provisions for Indian citizens leaving for overseas employment or serving as ship crew, as well as those for visiting citizens and people of Indian origin, have been integrated into new sections of the 2025 Act.

A notable procedural change involves the replacement of Form 10F with Form 41 for taxpayers claiming treaty benefits. Additionally, the Act clarifies rules regarding foreign income and double taxation, folding previous provisos into new subsections to streamline the scope of total income.

Taxpayers are reminded that tax residency and residency under the Foreign Exchange Management Act (FEMA) function independently. Experts suggest that individuals should continue to track their days spent in India and monitor their specific income thresholds to ensure ongoing compliance.