Key Takeaways
• ITAT ruled M. Mahadevan’s global income taxable due to tourist visa use for business travel.
• Indian tax law requires business travel be on business visas to qualify as non-resident.
• Using tourist visas for business risks global income taxation and legal penalties.
On June 10, 2025, the Income Tax Appellate Tribunal (ITAT) in Chennai delivered a decision that is already sending ripples through India’s business and tax communities. The tribunal upheld the Income Tax department’s move to tax the global income of M. Mahadevan, the founder of the well-known Hot Breads bakery chain, after finding that he used tourist visas for business travel. This ruling is a wake-up call for Indian businesspeople who travel abroad and maintain business interests outside India, highlighting the risks of mixing business activities with tourist visas and the serious tax consequences that can follow.
What Happened: The Tribunal’s Decision
The case centered on whether Mahadevan could claim Non-Resident Indian (NRI) status for the assessment years 2013-14, 2014-15, and 2019-20. The Income Tax department used records from the Foreign Regional Registration Office (FRRO) to show that Mahadevan spent 182 days or more in India during these years. Under Indian tax law, this is a key threshold for deciding if someone is a “resident” for tax purposes.
Mahadevan argued that his frequent international travel was for business, and therefore, he should be treated as a non-resident. However, the ITAT found that he had traveled on tourist visas rather than business visas. The tribunal stressed that the purpose of travel, as shown by the visa type, is critical in determining tax residency. If someone leaves India on a tourist visa, even if they conduct business abroad, they may not qualify for NRI status. This means their global income—not just income earned in India—can be taxed by Indian authorities.
Why the Visa Type Matters
Countries issue different types of visas for specific reasons. A tourist visa is meant for leisure, sightseeing, or visiting friends and family. A business visa is for attending meetings, negotiating contracts, or other business-related activities. Using the wrong visa can have serious consequences, not just with immigration authorities but also with tax departments.
The ITAT’s ruling makes it clear: Using a tourist visa for business travel can jeopardize your tax status. Even if you spend enough days outside India, the reason for your travel—shown by your visa—matters just as much as the number of days you are away.
Key Legal Points from the Ruling
The tribunal’s decision highlights several important legal and tax rules that every international business traveler from India should know:
1. Residency Status and the 182-Day Rule
Indian tax law says that if an individual spends 182 days or more in India during a financial year, they are considered a “resident” for tax purposes. However, there is an exception: if someone leaves India for employment or business purposes, the threshold for residency can be extended, allowing them to qualify as a non-resident even if they spend more time in India.
But here’s the catch: The benefit of this exception only applies if the person leaves India on a business or employment visa. If you leave on a tourist visa, you don’t get this benefit, even if you are actually working abroad.
2. Visa Category Is Critical
The ITAT ruling underlines that the type of visa you hold is just as important as the number of days you spend outside India. If you use a tourist visa for business, you risk being classified as a resident, making your global income taxable in India.
3. Global Income Taxation
If you are considered a resident, all your income from around the world is taxable in India. This includes salary, business profits, rental income, and investment returns from other countries. If you are a non-resident, only your Indian income is taxed.
4. Documentation and Proof
The tribunal also made it clear that proper documentation is essential. If you claim to be working abroad, you need to show proof—not just of your activities, but also that you held the correct visa for those activities.
Expert Opinions: What Tax Professionals Say
The ITAT’s decision has drawn strong reactions from tax experts, who see it as a turning point for how Indian authorities view the link between visa compliance and tax residency.
Ashish Karundia, founder of the CA firm Ashish Karundia, pointed out that if someone can prove they genuinely left India to conduct business—even if they mistakenly used the wrong visa—they should still get the benefit of the extended 182-day rule. However, he stressed that this only applies when the person leaves India specifically for business or employment.
Rajesh Shah, partner at Jayantilal Thakkar & Co, explained: “A resident Indian becomes non-resident only if they go abroad for employment, including self-employment. Simply staying outside India for 182 days does not make anyone a non-resident. The type of visa is equally important.”
These views show that while there may be some room for interpretation, the safest approach is to always use the correct visa for your travel purpose.
International Context: How Other Countries Handle Business and Tourist Visas
The ITAT’s ruling comes at a time when visa compliance is under the microscope worldwide. For example, in the United States 🇺🇸, the B-1 business visa is specifically for business activities like attending meetings or conferences. It does not allow for actual employment or productive work. Stays are usually limited to less than six months, and using the wrong visa can lead to serious problems with U.S. immigration authorities.
Recently, the United States 🇺🇸 introduced a travel ban affecting 19 countries, starting June 9, 2025. This has made international business travel even more complicated, with longer processing times, more visa denials, and stricter checks on the purpose of travel.
These changes show that visa compliance is not just an Indian issue—it’s a global concern. Business travelers everywhere need to be careful about the type of visa they use, as mistakes can lead to both immigration and tax troubles.
For more information on U.S. visa categories and their permitted uses, you can visit the U.S. Department of State’s official visa page.
What’s Next for M. Mahadevan and Similar Cases?
A family member of Mahadevan has said they are “currently reviewing the order of the Hon’ble ITAT in detail,” suggesting that an appeal to a higher court is possible. However, the case has already set a strong example for others in similar situations.
For Indian businesspeople with overseas interests, this ruling is a reminder to review their visa and tax planning strategies. It’s not enough to simply spend time outside India; you must also ensure your travel purpose matches your visa and that you keep clear records of your activities.
Practical Implications for International Business Travelers
This decision has wide-ranging effects for anyone who travels internationally for business while maintaining ties to India. Here’s what you need to know:
1. Choose the Right Visa
- Always apply for the correct visa category based on your travel purpose.
- If you are traveling for business, use a business visa—not a tourist visa.
- Using a tourist visa for business can lead to problems with both immigration and tax authorities.
2. Plan Your Tax Residency Carefully
- Track the number of days you spend in India each year.
- Understand the rules for NRI status and how your travel purpose affects your tax residency.
- Remember: Both the number of days and the purpose of travel matter.
3. Keep Good Records
- Keep copies of your visas, travel tickets, and any documents showing your business activities abroad.
- If you are ever questioned by tax authorities, these records can help prove your case.
4. Get Professional Advice
- International tax and immigration laws are complex and can change often.
- Consult a qualified tax advisor or immigration lawyer before making decisions about your travel or business plans.
5. Understand the Risks
- If you are classified as a resident, your global income is taxable in India.
- Failing to comply with visa rules can also lead to penalties, fines, or even bans from entering certain countries.
Broader Impact: What This Means for Indian Businesses
The ITAT’s ruling is likely to change how Indian businesses approach international expansion. Companies with overseas operations must now pay closer attention to how their employees travel and the types of visas they use. This may mean:
- Stricter internal policies on travel and visa applications.
- More training for staff on the importance of visa compliance.
- Closer cooperation between HR, legal, and finance departments to ensure all aspects of international business are handled correctly.
According to analysis by VisaVerge.com, this case highlights the growing importance of aligning immigration and tax strategies for Indian businesses with global operations. As more companies look to expand internationally, the risks of getting it wrong are higher than ever.
Lessons for Individuals: Avoiding Common Mistakes
Many people believe that simply spending enough days outside India is enough to qualify as an NRI and avoid tax on global income. This case shows that it’s not that simple. The type of visa you use, the purpose of your travel, and your documentation all play a role.
Common mistakes to avoid:
- Using a tourist visa for business trips.
- Not keeping track of days spent in India and abroad.
- Failing to keep records of business activities.
- Assuming that time spent abroad automatically means non-resident status.
What Should You Do If You’re in a Similar Situation?
If you are an Indian citizen with business interests abroad, or if you travel internationally for work, here are some steps you can take right now:
- Review your recent travel history and visa types.
- Check your tax residency status for the past few years.
- Consult a tax professional to see if you are at risk of being classified as a resident.
- If you have used the wrong visa in the past, gather all documentation that shows your real purpose of travel.
- Consider amending your tax filings if you discover errors.
Official Forms and Resources
If you need to check your tax residency status or file taxes as an NRI, you may need to use official forms such as the Income Tax Return (ITR) forms. Always use the latest versions from the official government website.
For more information on Indian visa categories and their permitted uses, visit the Bureau of Immigration, Government of India.
Final Thoughts: The Importance of Getting It Right
The ITAT’s ruling in the M. Mahadevan case is a clear reminder that visa compliance and tax planning go hand in hand. For Indian businesspeople and companies with global interests, the risks of using the wrong visa are real and can lead to unexpected tax bills, penalties, and even legal trouble.
By understanding the rules, keeping good records, and seeking professional advice, you can protect yourself and your business from costly mistakes. As international travel rules become stricter and tax authorities pay closer attention to cross-border activities, doing things by the book is more important than ever.
If you have questions about your own situation, don’t wait—talk to a qualified professional today. The cost of getting it wrong can be far greater than the time and effort needed to get it right.
Learn Today
Income Tax Appellate Tribunal (ITAT) → A tribunal in India that hears appeals against income tax department decisions.
Non-Resident Indian (NRI) → A person who resides outside India and is taxed only on India-sourced income.
Tourist Visa → A visa allowing leisure travel, sightseeing, or visiting family, not for business purposes.
Business Visa → A visa permitting business-related activities like meetings or contract negotiations abroad.
Global Income Taxation → Taxation of all income earned worldwide by an individual classified as an Indian resident.
This Article in a Nutshell
The ITAT’s June 2025 ruling shows business travelers can’t use tourist visas for work abroad. This risks global income taxation in India, emphasizing visa compliance and careful tax planning to avoid costly consequences.
— By VisaVerge.com
