Understanding Residential Status in India -

Residential status for every person shall be determined for each Previous Year (PY) separately. PY means complete Financial Year from 1st April to 31st March of Succeeding Year.

Basic Conditions to be a Resident

Be in India for 182 days or more in the PY.
OR, be in India for at least 60 days in PY and a total of 365 days or more over the last 4 years.

If individual satisfy any one basic condition, then he is treated as Resident in India otherwise Non-Resident Individual (NRI).

Further Classification – Resident but not Ordinarily Resident (RNOR) or Resident and Ordinarily Resident (ROR):

Resident for 2 PY or more in last 10 PY And
Stay in India for 730 days or more in last 7 PY.

Once individual becomes resident, we have to check that such a person is Resident and Ordinary Resident (ROR) or Resident but not Ordinary Resident (RNOR). If both the additional conditions are satisfying then individual will be treated as ROR, otherwise RNOR.

Note:

The day on which he enters India and the day on which he exits India, both shall be treated as stay in India
In the following cases only 182 days condition (1st basic condition) will be applicable to determine residential status: –

1. Indian citizen leaves India for an employment outside India.
2. Indian citizen being crew member of Indian ship, leave India.
3. Indian citizen or PIO engaged in any employment or Business or Profession outside India and visiting India during any PY and his total income (excluding income from foreign sources**) is up to Rs.15 lakh in PY.

In case Indian citizen or PIO having total income (other than foreign source income**) of more than Rs.15 lakh, then second basic condition is applicable and instead of 60 days in PY, 120 days shall be considered.

Summary:

If individual having total income (other than foreign source income**) of more than Rs.15 lakh

Staying less than 120 days – NRI
Staying 120 days or more but less than 182 days – If both of the below mentioned conditions are satisfied then RNOR or else NRI
1. Stay in India for 365 days or more in last 4 PY
2. His total income exceeds 15 lakhs.
Staying for 182 days or more irrespective of total income – If both the below mentioned conditions are satisfied then ROR otherwise RNOR: –

1. Resident in India for 2PY or more in last 10PY
2. Stay in India for 730 days or more in last 7 PY

Deemed Resident

If all of the following conditions are satisfied then the person is Resident (RNOR) but if any of the one is not satisfied then he/she is NRI.

Indian citizen
If having total income (other than foreign source income) of more than Rs.15 lakh
Not liable to tax in any other country by reason of his domicile or any other similar criteria.

Key Takeaways for NRI

Individual will be considered as NRI in the following cases:

Stay in India less than 182 days in any PY OR
Stay in India less than 60 days in any PY and less than 365 days in last 4 PY’s.
Individual residing in India less than 182 days and having total income (other than foreign source income**) up to Rs.15. lakh.
Individual residing in India less than 120 days and having total income (other than foreign source income**) of more than Rs.15. lakh.
If any one of the following conditions are not satisfied then also NRI:

- Indian citizen.
- If having total income (other than foreign source income) of more than Rs.15 lakh.
- Not liable to tax in any other country by reason of his domicile or any other similar criteria.

** Income from foreign source means income which accrues or arises outside India EXCEPT income derived from a business controlled or profession set up in India.