Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
What the deemed-resident rule targets
The rule (Section 6(1A)) was aimed at ‘stateless’ income — Indian citizens who arrange their affairs so they are tax-resident nowhere. If you are an Indian citizen, your Indian income exceeds ₹15 lakh, and you are not liable to tax in any other country by reason of domicile or residence, India can treat you as a deemed resident.
What it does and doesn't do
Importantly, a deemed resident is taxed as RNOR — so only Indian income (and income from a business controlled or profession set up in India) is taxed, not your worldwide income. And it simply does not apply if you genuinely pay tax in another country, even at a low rate. ‘Not liable to tax’ is a technical test — confirm your position.
A worked example
Example: an Indian citizen living in a zero-tax country with ₹25 lakh of Indian income, not taxed anywhere, can be a deemed resident — but taxed only on that Indian income as RNOR, not on global earnings. By contrast, someone genuinely taxed in the UK or US is unaffected. The rule rarely bites for ordinary NRIs in taxing countries. Our NRI planning service can assess it.