Plan your residency and save taxes

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.
An individual is said to be a non-resident in India, if he does not satisfy above conditions.
Non-resident Indians (NRIs) should know the tax implications before their arrival in India so as to plan their tax affairs. How to maintain NRI status even after coming back to India??
To maintain NRI status in India, the individuals must take care of the following points:

• Individual visiting India desires to enjoy NRI status should not look to stay in India for more than 181 days during the previous year and total stay in India during the previous four years should not exceed 364 days. If the total stay in India during last four years exceeds 364 days, then stay in the current previous year should be less than 60 days.

• If an individual having stay of more than 365 days during last four years preceding the relevant previous year, desires to stay more than 60 days in India, he should plan his visit in a manner that his total stay falls under two previous years. In such case, it is advisable to come to India in the month of February so that he can stay in India upto 29th may of the next previous year and can still enjoy his NRI status.

• Resident Indians leaving India for employment should leave India by 28th September so that his total stay in that previous year will not exceeds 181 days.

• Resident Indian leaving India otherwise for employment should leave India by 29th September. He shall not stay in India more than 181 days in the previous year to enjoy the NRI status.

• NRI returning must ensure that his return to India on or after 1st February of a financial year so as not to lose his non-resident status. However, if his aggregate stay in India during 4 preceding financial years doesn’t exceed 364 days, then he may return to India anytime after September 30th of the relevant year without losing his non-resident status.

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