Non-Resident Indian
Residential Status under Income-tax Act, 1961
Understanding your residential status in India is crucial for determining your income tax liability. As per the Income-tax Act, 1961, your residential status (RS) is based on the number of days you stay in India during a financial year (1st April to 31st March). Even the day of arrival and departure counts in calculating your stay.
At Casela Advisors, we help individuals—especially NRIs, returning Indians, and global Indians—determine their correct residential status and understand their tax obligations in India.
1. Who is a Non-Resident (NRI) under Income Tax?
An individual is classified as a Non-Resident (NRI) if both the following conditions are satisfied under Section 6(1) of the Income-tax Act, 1961:
| Condition | Status |
|---|---|
| Not in India for 182 days or more during the relevant financial year | ✅ NRI (Non-Resident) |
| Not in India for 60 days or more during the financial year AND not in India for 365 days or more during the 4 preceding years | ✅ NRI (subject to exceptions) |
Exceptions to the 60-Day Rule (Extended to 182 Days):
| Category | Days Allowed |
|---|---|
| Indian citizen leaving India for employment | 182 days |
| Crew member on an Indian ship | 182 days |
| PIO or Indian citizen visiting India with income < ₹15 lakhs (excluding foreign income) | 182 days |
| PIO or Indian citizen visiting India with income > ₹15 lakhs (excluding foreign income) | 120 days |
(*Amendments as per Finance Act, 2020)
2. Deemed Resident in India – As Per Finance Act, 2020
To address cases where individuals avoid tax in all countries, a new category called “Deemed Resident” was introduced.
An individual will be considered as a Deemed Resident of India if:
- He is a citizen of India,
- His total income (excluding foreign sources) exceeds ₹15 lakhs in India during the year,
- He is not liable to tax in any other country.
Such individuals will be treated as Resident but Not Ordinarily Resident (RNOR).
Exemptions from Deemed Residency:
- Individuals already qualifying as residents under Section 6(1),
- Bonafide workers in foreign countries (e.g., UAE) who are not liable to tax in those countries (as clarified in the CBDT press release dated 2nd Feb 2020).
3. Resident in India – Understanding ROR and RNOR
If an individual does not satisfy both conditions of Section 6(1), they are classified as Resident in India. A Resident is further classified into:
A. Resident But Not Ordinarily Resident (RNOR)
An individual qualifies as RNOR if they meet any one of the following conditions:
| Condition | RNOR Status |
|---|---|
| Non-resident in India for at least 9 out of 10 previous years | ✅ RNOR |
| Stay in India is 729 days or less during the 7 preceding years | ✅ RNOR |
| Citizen/PIO visiting India, income > ₹15 lakhs (excluding foreign sources), and stay in India between 120 to 182 days | ✅ RNOR |
| Citizen of India deemed to be resident (per Deemed Residency rules) | ✅ RNOR |
B. Resident and Ordinarily Resident (ROR)
If an individual does not meet any of the above RNOR conditions, they are treated as Resident and Ordinarily Resident (ROR). An ROR is taxed on global income in India.
Key Points to Remember
- A person returning to India after 9 years of being an NRI may qualify as RNOR for 2 years, reducing tax exposure on global income.
- The ₹15 lakh income threshold (excluding foreign income) is critical and must be evaluated on a case-to-case basis under professional guidance.
- Your residential status directly impacts your taxability in India, so accurate classification is essential.
Why Choose Casela Advisors?
At Casela Advisors, our expert Chartered Accountants for NRIs assist you in:
- Determining accurate residential status under Income Tax rules
- Filing correct ITR based on residential status
- Advising on global income tax planning
- Avoiding dual taxation and compliance risks
Residential Status under FEMA, PIO and OCI – A Guide by Casela Advisors
Understanding your residential status under FEMA is essential for ensuring compliance with Indian laws related to foreign exchange, investments, and repatriation. At Casela Advisors, we help NRIs, PIOs, and OCIs stay compliant with both FEMA and Income Tax regulations.
A. Who is a Non-Resident under FEMA?
The term Non-Resident Indian (NRI) is defined differently under FEMA and the Income-tax Act, 1961. Here, we explain how FEMA determines the residential status in India.
FEMA Definition of Resident in India:
A person is considered a resident in India under FEMA if:
- They have resided in India for more than 182 days during the preceding financial year; and
- Their intention is to stay in India indefinitely (subject to the exclusions below).
Exceptions (Person Not Resident in India):
A person is treated as resident outside India (NRI) if they:
- Leave India for employment, business, or any purpose indicating an uncertain stay abroad, or
- Come to India for reasons other than employment or business, and their stay is for a definite, short-term period (e.g., tourism, medical treatment, family visit).
Key Points to Understand FEMA Residential Status:
- If you leave India for employment or business abroad, you are considered a non-resident from the day of departure.
- If you return to India to take up business, work, or to settle indefinitely, you become a resident from the date of arrival.
- The 182-day rule is a general guideline, but the intent and purpose of stay are critical for determining residential status under FEMA.
Scenarios for Residential Status as per FEMA
| Scenario | FEMA Residential Status |
|---|---|
| Person leaves India for employment in the UK | Non-resident from the date of departure |
| Student moves to the US for higher studies (3-year course) | Non-resident (per RBI circular) |
| Person leaves India after living here 182+ days in the past FY, for job abroad | Non-resident from date of departure |
| Person receives a US Green Card and leaves India intending to settle there | Non-resident from date of departure |
| US citizen (Indian origin) visits India for 250+ days to meet family | Still a non-resident under FEMA (no intent to settle in India) |
| Person comes to India for family event but falls sick and overstays | Non-resident (no business/employment in India) |
| Foreign national sets up a proprietary firm in India | Resident from date of business setup |
📝 Note: Residential status under FEMA impacts your ability to invest, hold assets, and conduct financial transactions in India. Casela Advisors offers specialized FEMA consultancy for NRIs and foreign nationals.
B. Who is a Person of Indian Origin (PIO)?
A Person of Indian Origin (PIO) refers to an individual (other than citizens of Pakistan or Bangladesh) who satisfies any of the following:
- Was a citizen of India at any time,
- Belonged to a territory that became part of India after August 15, 1947,
- Is a child, grandchild, or great-grandchild of such a citizen,
- Is a foreign spouse of a citizen of India or PIO.
🛑 Update: As of January 9, 2015, all PIO cardholders are deemed OCI cardholders under the new law. New registrations are only accepted under the OCI scheme.
C. Who is an Overseas Citizen of India (OCI)?
An Overseas Citizen of India (OCI) is a foreign national of Indian origin who enjoys certain privileges in India without holding full Indian citizenship. While dual citizenship is not allowed in India, the OCI scheme was introduced to bridge this gap.
Key OCI Benefits:
- Lifelong multi-entry visa to visit India.
- No requirement of police registration for any length of stay.
- Eligibility for Indian citizenship after 5 years of OCI registration, provided you reside in India for at least 1 year before applying.
- Equal rights as NRIs in financial, economic, and educational matters (except ownership of agricultural/plantation land).
- Eligible for employment in India, except in areas requiring special permits (e.g., mountaineering, missionary work, or research in restricted areas).
Casela Advisors – Your FEMA & NRI Compliance Experts
Navigating FEMA laws, NRI residential status, and OCI/PIO eligibility can be complex. At Casela Advisors, our experienced FEMA consultants and Chartered Accountants provide end-to-end services including:
Assisting in FEMA compliance, RBI reporting, and asset repatriation
Determining FEMA residential status
Advising on NRI investments and bank accounts
Helping you understand OCI card benefits
