The April 2026 tax residency changes aren't just about compliance—they're about smart strategic planning. At NRIMitr, we're helping NRIs across 30+ countries navigate these new rules with confidence. If you're earning ₹15 lakh or more from Indian sources, understanding how to structure your investments around the 120-day threshold could save you significant tax liability.
Understanding the 120-Day Rule Trap
The new Income Tax Bill 2025 introduces a critical threshold: if you're an NRI earning ₹15 lakh+ from India and you stay 120 days or more in a financial year (plus 365+ days over the preceding four years), you'll be classified as Resident but Not Ordinarily Resident (RNOR). This classification means your entire Indian income becomes taxable in India.
The "trap" happens when NRIs unintentionally cross this threshold through poor planning—extended family visits, business trips, or property management tasks that add up. With proper structuring, you can maintain your NRI status while still maintaining strong ties to India.
The Income Threshold: Your First Line of Defense
Before worrying about days spent in India, focus on the ₹15 lakh income threshold. If your Indian income stays below this amount, the 120-day rule doesn't apply to you at all.
Strategic Income Management
Rental Income Optimization: If you own NRI Real Estate generating rental income, consider timing renovations or maintenance expenses to offset income in high-earning years. NRIMitr's property management services can help optimize this balance.
Capital Gains Timing: Planning to sell property or investments? The timing of these transactions relative to April 2026 and the ₹15 lakh threshold requires careful analysis. Our compliance team can model different scenarios for your specific situation.
NRO Interest Management: Interest from NRO (Non-Resident Ordinary) accounts counts toward your Indian income. If you're close to the threshold, you might consider restructuring deposits or timing withdrawals strategically.
Residency Calculation: Tracking Every Day
The 120-day rule requires meticulous tracking. Both your arrival and departure dates count as days spent in India. Even short trips add up quickly—four visits of 30 days each puts you at the threshold.
Smart Visit Planning
Spread Visits Across Tax Years: Instead of spending three months consecutively, consider splitting visits across different financial years (April 1 to March 31). This distributes your India time more strategically.
Track Business vs. Personal Trips: While both count toward the 120-day total, understanding the split helps with overall NRI Investment planning and documentation.
Family Emergency Buffer: Life happens. Leave yourself a buffer of at least 20-30 days below the 120-day limit to accommodate unexpected family situations or business needs.
Portfolio Restructuring Strategies Before April 2026
The months ahead offer a crucial window to restructure your NRI Real Estate Investment and financial portfolio. Here are specific strategies NRIMitr recommends:
1. Property Portfolio Review
If you own multiple properties, analyze which ones generate the most taxable income. Consider whether to sell, hold, or restructure ownership before the new rules take effect. For properties purchased through NRIMitr's network of 2000+ transactions, we can provide detailed income projections under the new tax regime.
2. Investment Diversification
Focus on tax-efficient investments. FCNR (Foreign Currency Non-Residential) and NRE (Non-Residential External) account interest remains tax-exempt and doesn't count toward the ₹15 lakh threshold. Shifting funds from NRO to these accounts could be strategic.
3. Business Structure Optimization
If you have business income from India, the entity structure matters. Proper documentation showing business management happens abroad—not in India—can help with NRI Taxation planning. Our consultancy team has helped 100+ corporates navigate similar structural questions.
Grandfathering: Protecting Existing Investments
"Grandfathering" refers to ensuring your existing investments maintain favorable tax treatment under old rules. While the new law takes effect in April 2026, strategic actions taken before this date may offer advantages.
Documentation is Critical
Maintain thorough records of:
Property purchase dates and original investment amounts
Rental agreements and income streams established before April 2026
Investment portfolio composition as of March 31, 2026
Historical travel records and days spent in India
NRIMitr's compliance services include comprehensive documentation support to ensure you're fully protected as rules transition.
The RNOR Advantage: It's Not All Bad News
If you do become RNOR, there's a silver lining: while your Indian income is taxable, your foreign income remains tax-exempt. This creates planning opportunities.
Salary Structuring: If you work abroad, ensure your employment contract clearly shows foreign-source income. This portion won't be taxed in India even as an RNOR.
Foreign Investment Timing: Consider timing foreign investment gains or income for periods when you're RNOR in India, as these remain tax-free.
Portfolio Balance: Maintain a clear separation between Indian and foreign income sources for optimal tax treatment under NRI Taxation rules.
Taking Action: Your Pre-2026 Checklist
✓ Calculate Your Current Status: Add up all Indian income sources. Are you above ₹15 lakh?
✓ Map Your India Visits: Review the past four years and project the next year. Are you approaching 120 days?
✓ Assess Your NRI Real Estate Holdings: What's the rental income? What are potential capital gains if you sell?
✓ Review Investment Structure: Are your funds in tax-efficient accounts? Can income timing be optimized?
✓ Consult Experts: NRIMitr's team provides personalized analysis of your specific situation. With 5000+ returns filed and complete transparency, we understand the nuances of NRI Investment planning.
✓ Document Everything: Start maintaining detailed records now to support any restructuring decisions.
Why Choose NRIMitr for Post-Residency Planning?
The April 2026 deadline is approaching, and reactive planning often leads to suboptimal outcomes. NRIMitr offers:
Comprehensive Analysis: We look at your complete picture—real estate, investments, income sources, and travel patterns
Strategic Restructuring: Our consultancy team provides actionable recommendations tailored to your situation
Ongoing Compliance: As rules evolve, we keep you informed and compliant
Transparent Process: With 1200+ satisfied customers, we pride ourselves on clear communication and no surprises
The Bottom Line
The 120-day rule isn't a trap if you plan properly. It's a threshold to manage through smart structuring, strategic timing, and expert guidance. The key is acting now—before April 2026—while you still have maximum flexibility.
Your NRI Real Estate Investment and broader portfolio represent years of hard work and strategic saving. Don't let new tax rules erode that value through lack of planning. Whether you're building wealth for retirement, supporting family in India, or maintaining ties to your homeland, NRIMitr is here to help you navigate every regulation with confidence.
Frequently Asked Questions
1. If I become RNOR, what exactly gets taxed? As RNOR, all your Indian-source income is taxable, including salary earned in India, rental income from NRI Real Estate, capital gains from Indian assets, interest from NRO accounts, and business income from India. However, your foreign income remains tax-exempt—salary from abroad, foreign bank interest, rental from foreign property, and capital gains from foreign investments are not taxed in India.
2. Can I reset the 120-day count by taking short trips outside India? No. The 120-day rule counts total days present in India during a financial year, regardless of how many trips you take. Both arrival and departure days count as days in India. Even multiple short visits of 10-15 days each will accumulate toward the 120-day threshold.
3. What if my Indian income fluctuates around ₹15 lakh? This is where strategic planning matters most. NRIMitr can help you structure income streams—timing property sales, managing rental agreements, optimizing investment distributions—to stay below the threshold in critical years. We can model different scenarios based on your specific portfolio.
4. How does NRIMitr help with the restructuring process? We provide end-to-end support: analyzing your current investment structure and income sources, projecting tax liability under new rules, recommending specific restructuring strategies, helping execute changes (property sales, account transfers, documentation), and providing ongoing compliance support post-April 2026. Our team has filed 5000+ returns and understands exactly what works in practice.
5. Is it too late to start planning if April 2026 is close? It's never too late, but earlier is better. Even if we're months away from April 2026, strategic actions can still be taken. However, some restructuring options (like property sales or major investment shifts) need more lead time. Contact NRIMitr today for a consultation—we'll assess your situation and identify immediate actions you can take to optimize your position before the deadline.
Don't let the 120-day rule catch you off guard. Contact NRIMitr today for a comprehensive review of your NRI Investment portfolio and personalized restructuring recommendations. With our expertise in real estate, compliance, and strategic planning, we'll help you navigate April 2026 and beyond with confidence.
