ICAI releases NRI residential status handbook for tax and FEMA compliance

The Institute of Chartered Accountants of India (ICAI) has released a new handbook titled ‘Handbook on Residential Status for NRIs: Tax and FEMA Aspects’. Prepared by the International Taxation Committee, the July 2026 edition provides guidance on how residential status is determined under the Income-tax Act, 2025, and the Foreign Exchange Management Act, 1999 (FEMA).

The guide clarifies the distinctions between Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (NOR), and Non-Resident (NR) statuses. It highlights that residential status under FEMA may differ from tax residency, as FEMA considers the purpose and intention of an individual’s stay, whereas the Income Tax Act primarily focuses on the number of days spent in India.

The handbook covers various complex areas, including the transition from the old Income Tax Act of 1961 to the 2025 Act, double taxation avoidance agreements (DTAAs), tax treaties, and global mobility issues such as secondment and overseas employment. It also addresses transfer pricing rules and judicial precedents regarding residency determination.