Days Spent Abroad In Search For A Job? - Are they Taken Into Consideration While Calculating NRI Days?

Quick Background: How NRI Status Is Determined ?

Under the Indian Income Tax Act, your residential status for a financial year depends mainly on:

• How many days you were present in India during that year, and

• How many days you stayed in India over the last four preceding years.

Generally, to be considered an NRI:

• You must stay in India less than 182 days during the financial year, or

• You must stay less than 60 days in the financial year and less than 365 days over the preceding four years.

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The Case That Changed Everything: Mitesh Vijay Gulati vs. ITO

In this landmark case:

• Mr. Mitesh Gulati traveled abroad and stayed outside India for over 210 days.

• However, 28 days of this period were spent searching for a job — he did not have employment yet.

• The Tax Department excluded these 28 days, arguing only days spent in active employment should count toward NRI status.

• Consequently, they treated him as a resident and sought to tax his global income.

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What the ITAT Said ?

The Mumbai Income Tax Appellate Tribunal (ITAT) ruled:

• Job search days ARE counted toward NRI stay.

• The law only looks at physical presence — whether you are inside or outside India — not the purpose of being abroad.

• Thus, once a person leaves India, irrespective of whether they have a confirmed job, their days abroad should be counted for NRI determination.

Key Quote:

“Only the number of days present in India is relevant to determine residential status, not the activities undertaken abroad.”

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Why This Matters ?

This ITAT ruling is a major relief for thousands of Indians who:

• Move abroad to explore opportunities,

• Are waiting for a job offer while staying outside India, or

• Are between jobs after leaving India.

Without this clarification, many would have been unfairly taxed as Indian residents even after genuinely staying abroad most of the year.

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Caution: The Story Isn’t Over Yet

• The Tax Department could still appeal this ITAT ruling to a higher court.

• Also, future amendments in the Income Tax Act might change how such cases are treated.

So while this judgment is a strong precedent, it’s smart to maintain clear records:

• Passport entries/exits,

• Visa documents,

• Offer letters or appointment letters, if any.

If your residential status is critical to your tax planning, consult a Chartered Accountant .

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Final Thoughts

If you’re planning to go abroad to seek a job, this judgment should bring you peace of mind:

Your days spent abroad for job search now count towards your NRI status!

However, always stay updated with any changes in the law or new court rulings.

Better safe than sorry when it comes to taxes!