Flight cancellations and airspace restrictions affecting major Gulf transit hubs such as Dubai, Abu Dhabi and Doha have disrupted travel schedules for thousands of passengers, including foreign nationals and Gulf-based residents who had travelled to India for short visits.
While the immediate concern for travellers remains delayed departures and uncertain flight schedules, tax experts warn that prolonged stays in India due to such disruptions could unintentionally alter an individual’s tax residency status under Indian law — a shift that may carry significant financial consequences.
Deepesh Chheda, Partner at Dhruva Advisors, says extended travel disruptions may lead to an overlooked tax risk: “Flights disrupted, residency triggered — an unintended outcome where individuals who planned a brief visit could end up breaching India’s statutory day-count thresholds for tax residency.”
Why a longer stay can matter for tax purposes
Under the Income Tax Act, 1961, particularly Section 6, an individual’s tax residency in India is determined largely by the number of days spent in the country during a financial year (April–March).
Broadly, an individual may be treated as an Indian tax resident if:
- They stay 182 days or more in India during a financial year, or
- They stay 60 days or more in the relevant year and 365 days or more during the preceding four financial years.
These thresholds are largely mechanical, relying primarily on physical presence. As a result, travellers whose return journeys are delayed because of cancelled flights or restricted airspace could unintentionally cross these limits.
In practical terms, residency status determines the scope of income that India can tax. While non-residents are generally taxed only on income sourced in India, residents may face taxation on a broader range of earnings depending on their classification.
What happens if you cross the threshold?
If an individual’s stay extends beyond the statutory limits, Indian tax law may classify them as a resident for that financial year. However, not all residents are treated the same.
Resident but Not Ordinarily Resident (RNOR)
Many non-resident Indians (NRIs) who have lived abroad for long periods may qualify for RNOR status if they have been non-resident in nine out of the previous ten financial years. Individuals falling within this category are taxed primarily on income earned or received in India, with most foreign income remaining outside the Indian tax net.
Resident and Ordinarily Resident (ROR)
If the RNOR conditions are not satisfied — for instance, where the individual has spent significant time in India in recent years — the person may be classified as Resident and Ordinarily Resident. This status has broader implications because global income could potentially become taxable in India.
For individuals who maintain employment, investments or business interests abroad, the distinction between RNOR and ROR can significantly alter their tax exposure.
The risk of dual residency
Another complication that may arise is dual tax residency, where two countries simultaneously treat the same individual as a resident for tax purposes.
For instance, a professional who lives and works in the Gulf but becomes a tax resident of India due to an extended stay could still be regarded as a resident under the domestic tax laws of the country where they are employed.
This is where international tax treaties become important. India has Double Taxation Avoidance Agreements (DTAAs) with several jurisdictions, including the United Arab Emirates and Saudi Arabia.
These treaties contain tie-breaker rules that determine which country ultimately has the right to treat the individual as a resident for treaty purposes. The analysis typically follows a sequence of tests:
- Permanent home: Where does the person maintain a permanent residence?
- Centre of vital interests: Where are personal and economic relationships stronger?
- Habitual abode: Where does the person usually live?
Among these, the “centre of vital interests” test often becomes decisive. Tax authorities typically examine where the individual’s employment, family life and primary economic activities are located.
In many cases, someone who has lived and worked in the Gulf for years may still be considered a resident of that jurisdiction under treaty rules, even if they temporarily exceed India’s day-count thresholds due to exceptional circumstances. However, tax experts caution that such determinations are fact-specific and require careful evaluation.
A practical example
Consider a professional employed in Dubai who travels to India for a brief visit in April 2026 with plans to return within a few weeks. If regional airspace restrictions linked to geopolitical tensions delay the return journey for several months, the individual’s stay could exceed 182 days during the financial year.
In such a scenario, the person may technically qualify as an Indian tax resident under domestic law — even though their employment, home and economic interests remain overseas.
Treaty provisions may ultimately resolve the dual residency question, but the situation could still create compliance obligations such as filing tax returns or reporting foreign assets.
Risks for companies as well
The implications of travel disruptions are not limited to individuals. Tax specialists point out that corporate entities may also face exposure in certain circumstances.
One area of concern relates to Place of Effective Management (POEM) — a concept used to determine the tax residency of companies. If senior executives of a foreign company become stranded in India and begin taking key strategic decisions or conducting board meetings from the country, tax authorities could potentially argue that the company’s effective management lies in India.
If such a view is taken, the foreign company itself could be regarded as an Indian tax resident, bringing its global income within the Indian tax net.
A similar issue may arise for foreign partnership firms. Under Indian tax law, a firm is generally treated as non-resident if its control and management are situated wholly outside India. However, if partners stranded in India begin exercising management functions from within the country, tax authorities could contend that control is no longer wholly outside India.
Why documentation will be crucial
For travellers facing extended stays due to flight disruptions, maintaining documentation could become an important safeguard.
Experts advise preserving records that demonstrate the involuntary nature of the extended stay, including:
- Original flight bookings
- Airline cancellation or rescheduling notices
- Passport entry and exit stamps
- Travel advisories or airline communications
- Correspondence with employers regarding delayed travel
Such evidence may help establish that the extended presence in India resulted from circumstances beyond the individual’s control.
Lessons from the pandemic
A similar challenge emerged during the global travel shutdown triggered by the COVID-19 pandemic, when thousands of travellers were stranded across borders.
At the time, the Central Board of Direct Taxes issued relief measures excluding certain periods of forced stay in India from residency calculations. The move acknowledged that extraordinary circumstances could create unintended compliance burdens.
Whether a comparable relaxation will be introduced in the current situation remains uncertain. However, the precedent suggests that tax authorities have previously recognised the need for flexibility during exceptional disruptions.
When a few extra days matter
Travel disruptions are typically viewed as logistical inconveniences. Yet under tax law, each additional day spent in a country can carry legal consequences.
For travellers stranded in India due to the evolving West Asia situation, a brief visit could — at least on paper — turn into a tax residency trigger. Until clearer policy guidance emerges, experts say individuals should carefully track their day count and preserve documentation of travel disruptions.
In the arithmetic of tax residency, even a handful of unexpected days can make a significant difference.
