Updated 23 October 2026. We read the text of section 6 of the 2025 Act, the Income Tax Department's non-resident FAQ and a practitioner's summary. This is the first tax year under the new Act, and the rule matters most to Gulf owners planning a sale. It is general information, not tax advice; take a chartered accountant's view on your own facts.

What exactly does section 6(7) say?

  • Three conditions, all needed: you are a citizen of India; you are not liable to tax in any other country or territory by reason of domicile, residence or similar criteria; and your total income, other than income from foreign sources, exceeds ₹15 lakh in the tax year (Income-tax Act, 2025, section 6(7)).
  • It does not apply if you are already resident under the day-count tests (section 6(8)).
  • A citizen deemed resident under sub-section (7) is not ordinarily resident in India (section 6, definition of not ordinarily resident).
  • 'Income from foreign sources' means income that accrues or arises outside India, except income from a business controlled in, or a profession set up in, India (section 6).
  • Residential status under the new section applies only for tax years beginning on or after 1 April 2026; earlier years stay under the 1961 Act (Income Tax Department FAQ).

How a single flat sale can trigger it

Our illustration, not an official computation. A Dubai resident bought a Whitefield flat in 2019 for ₹80 lakh and sells it in 2026-27 for ₹1.6 crore. Before costs and improvements, the long-term gain is about ₹80 lakh. Add Indian rent and NRO interest, and Indian income is well above ₹15 lakh. If the seller is not liable to tax in the UAE by reason of residence, the three conditions are met and the seller is deemed resident, and not ordinarily resident, for 2026-27.

Whether a Gulf resident is 'liable to tax' where he lives is a question of fact and law. The UAE levies no personal income tax (u.ae). For Saudi Arabia, Qatar, Kuwait, Oman and Bahrain, check your own position with an adviser rather than assuming.

What changes if you are deemed resident?

  • Your Indian income is taxed in India in any case, as it would be for a non-resident.
  • As a not-ordinarily-resident person, foreign income such as a Gulf salary is generally outside Indian tax unless it comes from a business controlled in or a profession set up in India (section 6 definition; TaxGuru, 31 December 2025).
  • The buyer's TDS on the sale still needs care. When a non-resident sells, the buyer deducts 12.5% on long-term gains plus surcharge and cess under section 393(2) (house baseline). Residential status is decided for the whole tax year, so ask your CA before the sale how the buyer should deduct; excess tax deducted is claimed back in the return.
  • Indexation: the 20%-with-indexation option for property bought before 23 July 2024 is for residents (section 197(3)). We found no official guidance that a deemed resident can use it; do not assume so.
  • Your FEMA status as an NRI, and your NRE and FCNR(B) accounts, follow FEMA's own test, not this tax rule.

The 120-day rule if you spend time in India

Separately, if a citizen or person of Indian origin living abroad visits India and has Indian income above ₹15 lakh, the 60-day test becomes 120 days: you are resident if you spend 120 days or more in India in the year and 365 days or more in the four preceding years (section 6(4)–(5)). Someone resident through this route, with 120 to 181 days in India, is also not ordinarily resident (section 6). A long stay for a handover and a sale in the same year can therefore change your status.

What a Gulf owner should do before selling

  • Estimate your Indian income for the tax year, including the expected gain, rent and NRO interest.
  • Keep evidence of where you live and whether you are taxed there; a residence certificate from your Gulf country can help your adviser.
  • Count your days in India for the year and the four before it.
  • Plan the sale date with your CA; a sale near the end of March falls in a different tax year from one in April.
  • Think about a lower-deduction certificate (Form 128) if TDS will exceed the tax actually due.
  • Guides: Tds And Capital Gains, NRI Selling Property in India from the Gulf: TDS 2026, Repatriation Of Sale Proceeds, Gulf.