Residential Status Determination

Residential status is the starting point of every Indian tax calculation. Whether you are resident, not ordinarily resident or non-resident decides which income is taxable, what you must disclose and which benefits are open to you. It has to be worked out for each year, whether you are a foreign national in India, an NRI, a person of Indian origin, or an Indian living in India or abroad.

Why it matters

Status depends on the number of days you spend in India in a financial year, not on citizenship. It determines:

• whether only your Indian income, or your worldwide income, is taxable in India;
• the slabs, exemptions and deductions available to you;
• whether you must disclose overseas assets, bank accounts and investments;
• how advance tax and TDS apply to you.

A wrong status can mean paying too much tax, or too little followed by interest and penalties, and in serious cases of undisclosed foreign assets, prosecution.

The three categories

• Resident and ordinarily resident (ROR): meets the residence tests and has a long recent connection with India. Taxed on worldwide income.
• Resident but not ordinarily resident (RNOR): resident for the year but without the long connection. Taxed on Indian income and on foreign income from a business controlled or profession set up in India.
• Non-resident (NR): meets neither residence test. Taxed only on income arising or received in India.

The basic tests for individuals

Under section 6 of the Income-tax Act, you are resident in a financial year (1 April to 31 March) if you meet either of these:

• you are in India for 182 days or more during the year; or
• you are in India for 60 days or more during the year and 365 days or more in the four preceding years.

If you meet neither, you are non-resident for that year.

Exceptions to the 60-day test

• Indian citizens who leave India during the year for employment abroad, or as crew of an Indian ship: only the 182-day test applies.
• Indian citizens and persons of Indian origin who visit India: the 182-day test applies if their income other than foreign income is up to ₹15 lakh; if it is above ₹15 lakh, the 60 days becomes 120 days (and such a person is RNOR).

Deemed residence and RNOR status

Since FY 2020-21, an Indian citizen whose income other than foreign income is more than ₹15 lakh, and who is not liable to tax in any other country because of domicile or residence, is deemed resident in India. A deemed resident is treated as RNOR.

A resident individual is also RNOR if either:

• they were non-resident in 9 of the 10 preceding years; or
• they were in India for 729 days or less in the 7 preceding years.

RNOR status is particularly useful for NRIs returning to India and for expatriates: foreign income is generally not taxed in India during those years.

Examples

• Working abroad: an Indian citizen employed in the US visits India for 100 days in a year. Because he is abroad for employment, only the 182-day test applies to him, so he is non-resident.
• Visiting with high Indian income: a person of Indian origin living in the UK spends 130 days in India in a year, has been in India for over 365 days in the previous four years, and has Indian income of ₹18 lakh. The 120-day test applies, so she is resident, and as such a visitor she is RNOR.
• Foreign national: a foreign national spends 70 days in India this year and 400 days over the previous four years. He meets the 60 + 365 test and is resident.

How status changes what is taxed

Other taxpayers

• Companies: an Indian company is always resident; a foreign company is resident if its place of effective management is in India.
• Firms, LLPs, HUFs and other associations: resident unless control and management is wholly outside India.

How we help

• Working out your status for each year, including for frequent travellers and cross-border workers
• Building a day-count file from passports, visas, itineraries and employment records, ready if the tax department asks
• Advising on exemptions and treaty relief that follow from your status
• Making sure your return reports income and foreign assets correctly for that status

A checklist for individuals

• Work out your status every year; it can change quickly with travel or a job move.
• Keep travel documents, visas and overseas employment records, especially if you claim NRI or RNOR status.
• If you are returning to India or emigrating, plan around RNOR status before you move.
• Remember the wider effects of status on investments, inheritance and estate planning.

Common questions

Are the days of arrival and departure counted?

Generally, any day you are present in India, including the day of arrival and the day of departure, counts as a day in India. Keep boarding passes and passport stamps as evidence.

Can I be resident in India and another country at the same time?

Yes. Where both countries treat you as resident, the tie-breaker rules in the tax treaty decide which country you are resident in for treaty purposes.

How long does RNOR status last after I return?

It depends on your history over the previous 7 and 10 years. For many returning NRIs it lasts two to three years; we work it out from your actual travel record.

Section and form numbers on this page refer to the Income-tax Act, 1961 and its rules. From 1 April 2026 the Income-tax Act, 2025 applies, with new section and form numbers; the requirements described here are broadly unchanged. We use whichever numbering applies to your transaction date.