Residential Status for Income Tax

Author
By Hiral Vakil on February 18, 2019

The residential status of a taxpayer is determined every year for Income Tax purposes. The taxability of a person depends on their residential status.
The residential status is different from the citizenship of a person. For instance, in a financial year, a person can be a citizen of India but not a resident. Hence, impacting their taxability.

Types of Residential Statuses as per Income Tax Act

  1. Ordinary Resident of India
  2. Resident but Not Ordinary Resident of India (RNOR)
  3. Non-Resident of India (NRI)
residential-status-income-tax-flowchart

Primary Conditions:

A person is a resident of India if:

  1. He/She lived in India for 182 days or more during the financial year OR
  2. He/She lived in India for at least 60 days in a financial year and at least 365 days in the last 4 years.

Individual not fulfilling any of the above conditions will be a Non-Resident of India (NRI).

The second condition mentioned above will not be applicable in the following cases:

  • Any Indian citizen leaving India for the purpose of taking up employment (including self-employment) outside India.
  • Indian citizens leaving India as a member of the crew of an Indian ship.
  • Any person of Indian origin or Indian citizens residing outside India, if they come on a visit to India.

Additional Conditions:

If any one of the primary conditions is satisfied by a person then they are a resident of India. They also need to fulfil the following two conditions to become an Ordinary Resident of India:

  1. The person stayed in India for at least 2 years immediately before the current financial year out of 10 past financial years AND
  2. The person lived in India for at least 730 days immediately before the current financial year out of 7 past financial years.   

A person becomes Not Ordinary Resident of India (RNOR) if they do not fulfil any one of the above conditions.

Check your Residential Status
Know your residential status from: Resident, Ordinary Resident or Non-Resident

Sources of Income and its taxability

 

Source of Income

Ordinary Resident

Not Ordinary Resident

Non-Resident

Income earned in India.

Taxable in India

Taxable in India

Taxable in India

Any income received in India.

Taxable in India

Taxable in India

Taxable in India

Income earned outside India but received in India.

Taxable in India

Taxable in India

Taxable in India

Income earned and received outside India.

Taxable in India

Taxable in India

Not Taxable in India

Any income earned outside India for a business/ profession controlled in/from India.

Taxable in India

Taxable in India

Not Taxable in India

Income earned outside India from any source other than business/ profession controlled from India.

Taxable in India

Not Taxable in India

Not Taxable in India

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