When do you become a non-resident in India? Income tax and FEMA rules explained

Understanding residential status can get confusing, especially when you move abroad mid-year. Between income tax rules, FEMA regulations, and practical questions like TDS on rental income or bank account changes, it’s easy to feel unsure about where you stand. Let’s break this down step by step using a real-life scenario.

Today's Q&A explains such details in response to a query by a reader.

Under the Income Tax laws, a person is treated as a resident in India if they have been physically present in India for 182 days or more. As per Hungarian law, an individual who spends at least 183 days in Hungary during a calendar year is treated as a resident. For becoming a resident under the tax laws of Hungary, the physical stay is counted with reference to calendar year 2025. Since you were not in Hungary for more than 183 days during calendar year 2025, you are a resident only of India for the financial year 2025.

For the current financial year, tax at source will be deducted as if you are a resident. If you let out your property to a resident and the monthly rent is more than ₹50,000, tax at 2% will be deducted. Though the residential status of a person is determined after the end of the year based on physical stay, since you are likely to be present in India for less than 182 days, you would become a non-resident for the next financial year. Accordingly, the payer will have to deduct tax at 30%, treating you as a non-resident for tax purposes.

You have already become a non-resident under FEMA, but you are still a resident under the Income Tax laws as of today.