Under Indian Income Tax law, an individual’s residential status is crucial in determining their tax liability. The status is assessed for each financial year (April 1 to March 31), based on their physical presence in India. Here’s a clear breakdown of how it works:
✅ Residential Status Categories
- Resident
- Resident and Ordinarily Resident (ROR)
- Resident but Not Ordinarily Resident (RNOR)
- Non-Resident (NR)
🔍 Basic Conditions to Determine Residency
An individual is considered Resident in India if they meet any of the following:
- Stay in India for 182 days or more during the relevant financial year; OR
- Stay in India for 60 days or more in the financial year and 365 days or more during the 4 preceding financial years.
📝 Exception: For Indian citizens or Persons of Indian Origin (PIOs) who come to India on a visit, the 60-day rule is extended to 182 days. (This exception may not apply if their total income exceeds ₹15 lakh—see amendments below).
📌 Recent Amendments (Finance Act, 2020 onwards)
- Deemed Residency (Section 6(1A)): An Indian citizen earning total income exceeding ₹15 lakh (excluding foreign income) will be deemed resident in India if not liable to tax in any other country.
- Modified 60-day Rule (for high earners):
- For Indian citizens/PIOs who visit India and have income exceeding ₹15 lakh:
- The 60-day threshold becomes 120 days, not 182.
- For Indian citizens/PIOs who visit India and have income exceeding ₹15 lakh:
🧮 Resident and Ordinarily Resident (ROR) vs RNOR
If you’re a Resident, then further classification:
1. Resident and Ordinarily Resident (ROR) if:
- Resident in at least 2 of the last 10 financial years, AND
- Stayed in India for 730 days or more in the last 7 financial years.
2. Resident but Not Ordinarily Resident (RNOR) if:
- Fails any one of the above two conditions.
🚫 Non-Resident (NR)
If an individual does not satisfy any of the basic conditions above, they are considered Non-Resident for tax purposes.
📊 Tax Implications
| Category | Taxed on Indian Income | Taxed on Global Income |
| ROR | Yes | Yes |
| RNOR | Yes | No (only income from India + controlled foreign income) |
| NR | Yes | No |