L 9 &10 Residential Status

L-10,11 & 12
RESIDENTIAL
STATUS
Meaning & importance of residential status (Sec. 6)
The taxability of an individual in India depends upon his

residential status in India for any particular financial year.
The term residential status has been coined under the
income tax laws of India and must not be confused with
an individual’s citizenship in India. An individual may be
a citizen of India but may end up being a non-resident for
a particular year. Similarly, a foreign citizen may end up
being a resident of India for income tax purposes for a
particular year. Also to note that the residential status of
different types of persons viz an individual, a firm, a
company etc is determined differently.
How to determine Residential Status?
For the purpose of income tax in India, the

income tax laws in India classifies taxable persons
as:
A resident
A resident not ordinarily resident (RNOR)
A non-resident (NR)
The taxability differs for each of the above

categories of taxpayers. Before we get into
taxability, let us first understand how a taxpayer
becomes a resident, an RNOR or an NR.
Resident
Under section 6(1), a taxpayer would qualify as a

resident of India if he satisfies one of the following 2 basic
conditions :
a) Stay in India in the previous year for a period of 182

days or more, or
b) Stay in India for a period of 60 days or more during the
previous year and 365 days or more during 4 years
immediately preceding the previous year
Exceptions to the Basic Conditions
There are 2 exceptions to the above rule of classification

of Residential Status:-
Special Case 1:- The period of 60 days referred to in
basic condition (b) has been extended to 182 days in
case of an individual, who is a citizen of India and who
leaves India in any financial year for the purpose of
employment outside India.
Special Case 2:- The period of 60 days referred to in
basic condition (b) has been extended to 182 days to an
indian citizen or a person of indian origin who comes
on a visit to India.
Exception 3 U/S 6(1A)
The exception is given under section 6(1A) and applicable from

the assessment year 2021-22, The period of 60 days referred to in
basic condition (b) has been extended to 182 days in case of an
individual and he shall be deemed to be resident but not
ordinarily resident
1. who is a citizen of India or is a person of Indian origin
2. whose Indian income is less than Rs. 15 Lakhs
3. who being outside India comes on a visit to India in any
financial year,
Note:- In case the indian income is more than 15 lakhs – then the
no. of days in the 2nd condition would be considered as 120
instead of 60
Resident not ordinarily resident [Sec 6(1),(6)(a)]
If an individual qualifies as a resident, the next step is to determine if

he/she is a Resident ordinarily resident (ROR) or an RNOR. He will
be a ROR if he meets both of the following conditions:
1. Has been a resident of India in at least 2 out of 10 years
immediately preceding the previous years and
2. Has stayed in India for at least 730 days in 7 immediately
preceding years
Therefore, if any individual fails to satisfy even one of the above

conditions, he would be an RNOR.
Non -Resident
An individual is a non

resident in India if he
satisfies none of the basic
conditions.
Tax Liability
Resident: A resident will be charged to tax in India on his
global income i.e. income earned in India as well as
income earned outside India.
NR and RNOR: Their tax liability in India is restricted to
the income they earn in India. They need not pay any tax
in India on their foreign income. Also note that in a case
of double taxation of income where the same income is
getting taxed in India as well as abroad, one may resort to
the Double Taxation Avoidance Agreement (DTAA) that
India would have entered into with the other country in
order to eliminate the possibility of paying taxes twice.
Questions
Q. 1 X left India for the first time on April 11, 2020. During the
financial year 2021-22, he came to India once on October 2
for a period of 45 days. Determine his residential status for
the assessment year 2022-23.
Q.2 Consider the case of Mr. D, who is business head for Asia
Pacific regions for a private firm. Mr. D was born and brought up
in India. He has to travel to various locations of the continent for
business purposes. He has spent 200 days travelling in the
current financial year. Also, he has been travelling abroad from
the past two years and has stayed out of India for about 400
days in this period.
Let us evaluate whether Mr. D was resident in India for the current financial year.
Condition I (Resides in India for a minimum of 182 days in a
year) – Not satisfied
To figure out the resident status of Mr. D, you will understand that
he has only spent 165 days in India during the current financial year.
Hence, he does not satisfy the first condition.
Condition II (Resides in India for a minimum of 365 days in

the immediately preceding four years and for a minimum of
60 days in the current financial year) – Satisfied
However, It is given that Mr. D has been travelling only from the
past two years. Also, it is said that he has travelled for 400 days in
the past two years. That means, in the past four years, Mr. D has
stayed in India for more than 365 days (1061 days).
Hence, Mr. D has resided for atleast 60 days in the current financial
year and for more than 365 days in the immediately preceding four
financial years. Therefore, Mr. D satisfies the second condition.
Hence, if any one of the above two condition is satisfied he is a

resident taxpayer.
ROR or RNOR
There is a further classification under the resident status – Resident and Ordinarily Resident
(ROR) and Resident but Not Ordinarily Resident (RNOR).
In addition to the basic conditions, if both the below conditions are met, he will be a ROR:
 He has resided in India for at least 2 out of 10 immediate previous years.
 He has resided in India for at least 730 days in seven immediately previous years.
In above example Mr. D has satisfed as resident of India. Let us further classify whether
Mr. D is ROR or RNOR
If both the additional conditions are satisfied then Mr. D is ROR
Considering the example, Mr. D was travelling out of India since past 2 years only. Hence, the
first condition is satisfied as he resided in India for atleast 2 years out of the immediate
previous 10 years. Also, he has fulfilled the criteria of residing for at least 730 days in seven
immediately preceding years. Therefore, he can be considered as Resident Ordinarily
Resident.
If any one of the additional conditions is satisfied then Mr. D is RNOR.

Alternatively, consider that he had to work from the headquarters of his firm, located in Kota
Kinabalu, Malaysia for the past six years. He has only visited his parents for a week, twice a
year during this time. That means, he has resided in India for 449 days in the past six years and
the same applies for the current financial year too. In this case, first condition is satisfied but
not the second. Therefore, Mr. D is Resident Not Ordinarily Resident.
Q-3
Q.3 Ms. G went to London to join a reputed university for
a graduation course (three years). While studying there, her
professor suggested her to join a post- graduate course at the
same university (two years). She had to get an internship
certificate to complete the course. Upon completion, the
firm offered her a permanent position. She has been an
employee there for the past four years. That is, Ms G has
stayed out of India for nine years now. She receives rental
income from the property that she inherited from
her parents.
Both the basic condition are not satisfied. That
makes Ms. G a non-resident.
Q-4&5
Q.4 X (40 years) is a citizen of India. He leaves India

for the first time on July 31, 2020 for the purpose of
working on an overseas project of his Indian employer
company. He finally comes back on November 28, 2021.
Find out his residential status for the AY 2022-23.
Q.5 X is a foreign citizen. He is not a person of Indian

origin. He comes to India for the first time on April 3,
2017. during the FY 2017-18, 2018-19, 2019-20, 2020-21
and 2021-22, he is in India for 140 days, 85 days, 18 days,
217 days and 60 days respectively. Determine the
residential status of X for the AY 2022-23

L 9 &10 Residential Status

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L-10,11 & 12

The taxability of an individual in India depends upon his

For the purpose of income tax in India, the

The taxability differs for each of the above

Under section 6(1), a taxpayer would qualify as a

a) Stay in India in the previous year for a period of 182

There are 2 exceptions to the above rule of classification

The exception is given under section 6(1A) and applicable from

If an individual qualifies as a resident, the next step is to determine if

Therefore, if any individual fails to satisfy even one of the above

An individual is a non

Condition II (Resides in India for a minimum of 365 days in

Hence, if any one of the above two condition is satisfied he is a

If any one of the additional conditions is satisfied then Mr. D is RNOR.

Q.4 X (40 years) is a citizen of India. He leaves India

Q.5 X is a foreign citizen. He is not a person of Indian

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