Taxation of individuals in India is primarily based on their residential status in the relevant tax year. See the Taxes on personal income section for a description of the types of residential status envisaged for an individual.
An individual is said to be a resident in the tax year if he/she is:
- physically present in India for a period of 182 days or more in the tax year (182-day rule), or
- physically present in India for a period of 60* days or more during the relevant tax year and 365 days or more in aggregate in four preceding tax years (60-day rule).
If none of the above two conditions are met, the individual is said to be an NR in that tax year.
Example:
- If Mr. A comes to India on or before 30 September, he will be treated as resident for that tax year.
- If Mr. B comes to India on or before 31 January and has stayed in India for 365 days or more during the four tax years preceding the relevant tax year, he will be treated as resident for that tax year.
A resident individual is treated as RNORif he/she satisfies any one of the following conditions:
- He/she has been an NR in nine out of ten tax years preceding the tax year for which residential status is being determined.
- His/her physical presence in India is less than or equal to 729 days during seven tax years preceding the tax year for which residential status is being determined.
A resident individual not satisfying both of the above conditions is treated as ROR.
Example:
If an expatriate stays in India for 300 days for each of three tax years, then he/she will not qualify as RNOR in the fourth year because of the following reasons:
- He/she is not an NR in nine out of ten tax years.
- His/her physical presence in India exceeds 729 days in the preceding seven tax years.
In determining the physical presence of individuals in India, it is not essential that their stay in the country needs to be continuous or at the same place.
Furthermore, their date of arrival in India and date of departure from it may be considered as their period of stay in the country. The purpose of their residence in India is irrelevant, and even if it is for a visit to their families or tourism, it is counted as a stay in India for residency purposes.
In effect, a newcomer to India normally remains an NR/RNOR for the first two to three tax years of stay in India.
*The rules are slightly more liberal for a person who is of Indian origin or an Indian citizen residing abroad and visiting India, or who is an Indian citizen and leaves India for employment abroad.
- An Indian citizen who leaves India as a member of the crew of an Indian ship or for taking employment abroad will qualify as a resident of India only if physically present in India for 182 days or more during that tax year.
- An Indian citizen or a person of Indian origin having taxable India-sourced income not exceeding INR 1.5 million and who, being outside India, comes on a visit to India will qualify as a resident of India only if physically present in India for 182 days or more during that tax year.
Effective 1 April 2020, an Indian citizen or person of India origin who, being outside India, comes on a visit to India and whose India-sourced taxable income exceeds INR 1.5 million during the relevant tax year will qualify as a resident of India only if physically present in India for 120 days or more during that tax year and 365 days or more during the previous four tax years immediately preceding the relevant tax year. Further, such an individual will qualify as RNOR if the total stay in India during the relevant tax year is 120 days or more but less than 182 days.
Deemed resident
An Indian citizen having India-sourced taxable income exceeding INR 1.5 million during the relevant tax year will be deemed to be a resident of India if one is not liable to tax in any other country by reason of domicile or residence or any other criteria of similar nature. Further, such an individual will qualify as RNOR in India for the relevant tax year.
The above rule of determining a person as a 'deemed resident' of India will only be applicable where the normal rule of residency based on the individual's physical presence in India during the relevant previous year and/or past four taxyears is not applicable.
For the purpose of residency in India, the expression 'India-sourced taxable income' will include income deemed to accrue or arise in India.
To provide more clarity on the applicability of this provision, the definition of the term 'liable to tax' is introduced, which means that there is a liability of tax on the person under any law for the time being in force in any country and also includes cases where, subsequent to imposition of tax liability, an exemption has been provided.
FAQs
Ø As per the definition given in the Foreign Exchange Act, stay for a period of 182 days in India in a previous year makes an individual a Person resident in India.
What is a resident individual in India? ›
An individual would be resident in India if he stays for 182 days or more in India during the previous year or if he stays for 60 days during the previous year and 365 days in the 4 years preceding previous year. If an individual fails to satisfy the above conditions, he will be considered as a non-resident in India.
Can a foreigner be a resident in India? ›
If the intention of the foreigner is to stay for more than 180 days, he/she should get himself/herself registered within 180 days from the date of arrival with the Foreigners Registration Officer concerned. However, children below the age of 12 years are exempt from the requirement of registration.
What does person not being an individual resident in India mean? ›
(6)[ A person is said to be "not ordinarily resident" in India in any previous year if such person is- (a)an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods ...
What is the difference between resident individual and non-resident Indian? ›
A person of Indian origin living abroad is known as a Non-Resident Indian (NRI). The Income-tax Act, 1961, provides different tax rules for Indian residents and NRIs. Indian-origin individuals are considered residents when they live for a certain period in India.
What is the difference between citizen and resident in India? ›
Citizenship is permanent. Residency, on the other hand, is a permit that allows an individual to reside in a specific country with conditions that must be adhered to. Residency can be either temporary or permanent.
What is the new NRI rule in India? ›
Rules Implemented
NRIs are mainly Indian citizens residing abroad and persons of Indian origin who visit India for less than 182 days in the whole financial year. But as per new income tax rules, the government reduced the tenure from 182 days to 120 days for all those NRIs whose annual income exceeds Rs 15 Lakhs.
How can I stay in India permanently? ›
Residence permit by employment in India
One of the simplest ways to immigrate to India and obtaining residency is employment. This type of visa has the advantage of being issued for up to 5 years, as well as being extendable, thus enabling its holder to become a permanent resident of India.
Is it hard to get residency in India? ›
To get your permanent residence in India, your investment can be made through new companies or by injecting capital into existing companies. The minimum investment is at least INR 10 crores within 18 months or INR 25 crores within 36 months.
What happens if I stay in India for more than 180 days? ›
Long term tourist visa is issued to travel agents who have to visit India frequently. Those on tourist visas will also need to register with the Foreigners Regional Registration Office (FRRO) in case they stay continuously in India for more than 180 days.
The following individuals are not considered to be normal residents: Foreign visitors and tourists who travel to a country for conferences, sports, vacations, medical care, or other purposes. International organizations like the UN, WHO, etc. are not regarded as regular residents of the country in which they operate.
Who qualifies as non-resident Indian? ›
A Non-Resident Indian (NRI) is a person who is a citizen of India, or is a person with Indian origins, but does not live in India anymore, i.e. is not a resident of India.
Who is not a resident Indian? ›
An Indian citizen or a foreign citizen of Indian origin who has stayed abroad for employment/carrying out business or vocation for 182 days or more or under circ*mstances indicating an intention for an unknown duration of stay abroad is a Non-Resident Indian (NRI).
Can a foreigner be an Indian resident? ›
Yes. As per the provisions of section 5(1) (g) of the Citizenship Act, 1955, a person who is registered as an OCI for 5 years and is residing in India for 1 year out of the above 5 years, is eligible to apply for Indian Citizenship. 30. Will an OCI be granted gratis to certain categories of people?
Who are ordinary residents in India? ›
This can be based on factors like your nationality, place of birth, or permanent residence. However, under the Income Tax Act, an individual is considered ordinarily resident if they meet either of the following conditions: They have spent 730 days or more in India in the seven years preceding the current year.
What is resident but not ordinary resident in India? ›
Resident but Not Ordinarily Resident (RNOR)
You have lived in India for at least two of the ten previous financial years before the current year. You have traveled to India for at least 730 days in the seven years prior to the current year.
Who is a person known as a resident of India? ›
Under Section 6(1) of the Income Tax Act, a person is considered a resident of India if they meet either of the following conditions: they stay in India for 182 days or more in a fiscal year, or they stay in India for 60 days or more in a fiscal year and 365 days or more in the four years immediately preceding that ...
Who is a resident in relation to an individual? ›
A resident is an individual who has a permanent home in Kenya and was present in the country for any period in a particular year of income.
Who is a permanent resident in India? ›
Permanent residency is a person's legal resident status in a country or territory of which such person is not a citizen but where they have the right to reside on a permanent basis. This is usually for a permanent period; a person with such legal status is known as a permanent resident.
