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Determination of Residential Status of individuals



The incidence of tax on a particular income of an individual depends on the residential status and thus the determination of correct residential takes paramount importance. An individual first should look to determine correct residential and then file his return of income.

An individual is said to be a resident in India, if he satisfies any one of the following two conditions:

(i)  He is in India for a period of 182 days or more in the relevant previous year, or

(ii) He is in India for 60 days or more during the relevant previous year and has been in India for 365 days or more during the four previous years immediately preceding the relevant previous year.

However, the second condition is not applicable in the following circumstances:

  • If an India citizen who leaves India in any previous year for the purpose of employment.
  • If an individual who is an Indian citizen leaves India in any previous year as a member of the crew of the Indian ship.
  • If an Indian citizen or a person of Indian origin from outside India, comes on a visit to India in any previous year.

A resident individual in India is said to be ‘not ordinarily resident in India’ if he satisfies any of the following conditions:

(i) He has not been a resident in India in nine out of ten previous years immediately preceding the relevant previous year, or

(ii) He has not been in India for 730 days or more in seven previous years immediately preceding the relevant previous year.

An individual is said to be a non-resident in India, if he does not satisfy above conditions.

For calculation of number of days of stay in India, the day he enters India and the day he leaves India both be treated as stay in India.

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Alok Patnia

Founder and Director at Taxmantra.com

About: 

Alok Patnia founded Taxmantra.com, an expert in tax advisory & compliance. He is a Chartered Accountant having prior exposure with Ernst & Young & KPMG.

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