Residential Status of an Individual


An Individual is said to be an Indian Resident for the purpose of Income tax if one of the following Basic conditions are satisfied:

 

a) An Individual is in India for at least 182 days in the previous year (PY).

b) An Individual is in India for at least 60 days in Previous Year & for 365 days or more in India during 4 years immediately preceding the Previous year.


If one of the above conditions are satisfied then he is resident of India as per Income Tax but an individual also needs to find out whether his residential status is resident and ordinarily resident (ROR) or resident but not ordinarily resident (RNOR).

 

If the Individual fulfills any one the following below conditions then he said to be resident but not ordinarily resident of India:

 

a) An Individual is a non resident for 9 years out of 10 years in India immediately before relevant financial year.

b) An Individual is in India for a period less than 729 day during 7 years immediately before the relevant financial year.

 

Else, he will be considered as a resident and ordinarily resident (ROR) in India.

These conditions need to be considered every year for every Individual, as taxability of Income is dependent upon whether he is a ROR or RNOR or NRI.

 

An individual is said to be Non-Resident if he does not fulfil any of the above-mentioned conditions.


Exceptions to Residential Status:

 

a) In case where an individual is a citizen of India and leaves India for the purpose of employment outside India in any financial year, then the 2nd condition stated above shall not apply and only 1st condition in respect of 182 days or more would apply. i.e. he will either be an NRI or a Resident and Not Ordinarily Resident.

 

b) In case where an individual is a citizen of India and who being outside India comes on a visit to India in any financial year, then the 2nd condition stated above shall not apply and only 1st condition in respect of 182 days or more would apply.

 

Computation of Period of Stay in India

 

For the purpose ascertaining residential status, the stay in India might not be for a continuous period. For computing the period of stay, total number of days in India during the relevant financial year shall be considered. It is not necessary that the stay should be only at one place, it can be anywhere in India.

 

For computing the period of 182 days for the purpose of residential status, the day when when he enters India and the day he leaves India should be considered as stay in India. Where his stay in India is close to 182 days, it has be calculated on hourly basis i.e. 24Hours will be considered as 1day.