The Residential Status of an individual for income-tax purposes depends on the physical stay of the individual in India

The Income Tax Act, 1961 governs the taxation of income in India. Income tax is charged on total income
for a given financial year. The financial year runs from 1 April to 31 March of the following year.

Residential status

The residential status of an individual for income-tax purposes depends on the physical stay of the individual
in India. Based on the period of stay in India in a given financial year, an individual may be classified as:

  •  Resident
  • Not ordinarily resident (NOR)
  • Non-resident (NR).

Tests of residence under the act

A. An individual is a resident in India if he stays in India for:

  • At least 182 days during a financial year
  • At least 60 days during a financial year and 365 days or more during the 4 years preceding that fiscal year.

Exceptions to the above:

  • The 60-day period mentioned above will be substituted for 182 days in case of the following persons:-
  •  A citizen of India who leaves the country as a crew member of an Indian ship or for the purposes of employment outside India
  • A Citizen of India or PIO who visits India in any previous year.

B. An individual is an NOR in India if:

  • He is an NR in India in 9 of 10 financial years preceding the relevant fiscal year
  • His stay in the 7 years preceding the relevant financial year is in the aggregate 729 days or less.

C. An individual is an NR in India if:

  •  He does not satisfy any of the two conditions mentioned in A above.

An NRI is defined as a citizen of India or a PIO who is not a resident.

A person shall be deemed to be of Indian origin if he or either of his parents or grandparents were born in
undivided India.

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