The determination of residential status of a person is very important as income tax is levied based on the residential status of a tax payer. The Residential status of a tax payer can be divided in the following categories.
Residential Status of an Individual
Basic Conditions :
- Stays in India for 182 days or more in previous year. OR
- Stays in India for 60 days or more in previous year and 365 days or more during 4 years preceding the previous year.
The aforesaid period of 60 days is extended to 182 days in case of
- Citizen of India who leaves India for the purpose of employment or as member of crew of Indian ship.
- Citizen of India or foreign national of Indian origin living outside India comes on a visit to India.
Determining whether ordinarily resident or not ordinarily resident?
An Individual who is resident in India is said to be ‘ordinarily resident in India’ if he satisfies both of the following conditions:
- Resident for at least 2 out of 10 years immediately previous years. AND
- Stays in India for at least 730 days 7 immediately previous years.
If an individual satisfies any one of the above conditions, he is said to be ‘not-ordinarily resident’ during such assessment year.
An individual satisfying neither of the conditions stated in 1 and 2 of the basic conditions, would be categorized an NR for the year.