Residential Status India - Are you an Indian Resident?

Residential status is a term defined in the Income tax Act, 1961.

Residential Status has nothing to do with the nationality of an Individual.

That means a foreign citizen can be resident in India if he meets the conditions laid out by the act.

The significance of Being A Resident and Ordinarily Resident, A Non Resident, and A Resident but not ordinarily resident.

One may ask, what does it matter if I am a resident or not?

Turns out, it does matter. Your residential status (ROR, NR, RNOR) will determine how your income will be taxed.

Tax is levied on total income of assessee.

Under the provisions of Income-tax Act, 1961 the total income of each person is based upon his residential status. Section 6 of the act divides assessable persons in three different categories

1. Ordinary Resident;
2. Resident but Not Ordinarily Resident; and
3. Non-Resident.

For example, a Non resident Indian need not pay tax on Income earned and received outside India.

However, a resident Indian needs to pay tax in India on any income earned anywhere in the world.

Click Here for detailed insight on how Income tax is determined for Residents and Non Residents.

Quick note: Assessment Year and Previous Year

If you want to consider your residential status from 1st April, 2018 to 31st March 2019. 2018-19 is the Previous year (for which year you are paying taxes, and 2019-20 is the Assessment year, where you compute your tax liability after the end of the previous year)

Residence in India - Are you an Indian Resident?

So, coming to the main question. Are you an Indian resident?

Well, You ARE a resident Indian if you satisfy ONE the following conditions:

1. During the previous year, you have stayed for more than 182 days in India. OR
2. During 4 years before the previous year, (not counting the previous year) you have stayed for a total of 365 days, BUT having stayed for at least 60 days during the previous year.

So, I can be a resident Indian, irrespective of my nationality, if I have stayed in India for more than 182 days during the previous year.

Or, I can be a resident if I have stayed in India for at least 60 days in the previous year, BUT the total period I stayed in India during 4 years BEFORE (i.e not counting) the previous year, is more than 365 days in total.

Exceptions to the Rule (Only Applicable to Specified Persons)

Please note that this exception is only applicable to the following Citizens of India who leave India during the previous year :

1. A member of crew of an Indian Ship ( defined u/s 3(18) of Merchant Shipping Act, 1958)
2. A person who leaves India for the purposes of employment outside India
3. A person of Indian Origin (Explanation to clause (e) of section 115C), who, being outside India, comes on a visit to India in any previous year

The conditions for these Individuals to be Residents are:

1. During the previous year, they have stayed for more than 182 days in India. OR
2. During 4 years before the previous year, (not counting the previous year) they have stayed for a total of 365 days, BUT having stayed for at least 182 days during the previous year.

So, that's how a person can be resident In India. We shall continue our discussion for Resident but not ordinarily resident and Non Resident Individuals in the coming ripples.

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