Effective: 1 April 2026 (assessment year 2026-27 onward) | Category: Tax | Status: Enacted -- a simplification and renumbering exercise, not a change to the underlying tax rules NRIs rely on.
The Income-tax Act, 2025 replaces the Income-tax Act, 1961 as India's governing income-tax statute, consolidating and renumbering provisions for clarity and removing redundant or obsolete language -- but it largely carries forward the substance of existing rules, including the residency tests, RNOR status, and the Deemed Resident provision NRIs already plan around, now under renumbered sections.
What changed
The Income-tax Act, 2025 was enacted as a consolidation and simplification of the Income-tax Act, 1961,
which had been amended so many times over six decades that its structure had become difficult to navigate.
The new Act reorganizes provisions, removes obsolete and redundant language, and renumbers sections -- for
example, the residency tests that determined NRI/Resident/RNOR status under the 1961 Act's Section 6 now sit
under a renumbered provision in the 2025 Act, carrying forward the same substantive 182-day and 60+365-day
tests, the same Finance Act 2020 Deemed Resident rule for high-income Indian citizens, and the same RNOR
transitional classification. This is a structural and drafting exercise rather than a wholesale rewrite of
tax policy.
Why it matters for NRIs
NRIs should expect the section numbers cited in older guidance, professional advice, or even this
platform's own older articles to shift, and should confirm the correct current section reference when citing
a specific provision to a bank, employer, or tax authority -- but the underlying planning logic (residency
day-count tests, the Deemed Resident ₹15 lakh threshold, RNOR's transitional foreign-income exemption)
remains substantively the same. NRIs relying on professional tax advice from before the transition should
have that advice's section references checked and updated, even where the substantive conclusion is
unaffected.
Articles on this platform affected by this change
This platform's NRI & Cross-Border Taxation in
India article already reflects the Income-tax Act, 2025's renumbering. Other articles across this
platform that reference residency status, RNOR, or the Deemed Resident rule in passing continue to describe
the correct substantive rule; where an article cites a specific 1961-Act section number for a provision
also addressed in the 2025 Act, readers should treat the substance as controlling and confirm the current
section number against the Income Tax Department's own transition guidance before relying on the exact
citation.
Did the Income-tax Act, 2025 change who qualifies as an NRI or as RNOR?
No -- the residency day-count tests, the Deemed Resident rule, and RNOR status all carry forward
substantively unchanged from the 1961 Act, just under renumbered provisions in the new Act.
Do I need to redo my tax planning because of this change?
Not because of this change specifically -- since the substantive rules are carried forward, existing tax
planning built around residency status, RNOR timing, or the Deemed Resident threshold should remain valid.
It's worth confirming section-number citations in any older written advice have been updated.
From when does the Income-tax Act, 2025 actually apply?
It applies from assessment year 2026-27 onward (income earned in financial year 2025-26 and later),
replacing the 1961 Act as the governing statute for returns and assessments from that point forward.
