Before filing your income tax return in India, the most important factor to assess is your residential status under Indian tax law. Your tax liability on Indian and global income depends on whether you are a Resident, Resident but Not Ordinarily Resident (RNOR), or a Non-Resident (NRI).
This blog explains how to determine your residential status for tax filing as per Section 6 of the Income Tax Act, 1961, with examples and guidance for FY 2024-25 (AY 2025-26).
Legal Reference
- Section 6, Income Tax Act, 1961
- CBDT Circulars on NRI and residency conditions
- Finance Act, 2020 amendments applicable to high-income NRIs
Why Residential Status Matters
Your residential status decides:
- Whether foreign income is taxable in India
- Whether you need to disclose foreign assets under Schedule FA
- If DTAA benefits and foreign tax credit can be claimed
- Whether certain exemptions or deductions are applicable
Conditions to Determine Residency (Section 6)
You are considered Resident in India if:
- You stay in India for 182 days or more during the financial year,
OR - You stay for 60 days or more in the year and 365 days or more in the 4 preceding years
For Indian citizens or PIOs (Persons of Indian Origin) visiting India:
- 60-day rule is replaced with 182 days
- However, if income (excluding foreign income) exceeds ₹15 lakh, and stay is 120 days or more, the 60-day condition applies again
Sub-Classification of Residents
If you are a Resident, you can be:
- Resident and Ordinarily Resident (ROR)
- Taxable on global income
- Must report all foreign bank accounts, assets, and companies in ITR (Schedule FA)
- Resident but Not Ordinarily Resident (RNOR)
- Taxable only on Indian income + foreign income controlled from India
- Conditions:
- Non-resident in 9 out of 10 preceding years
- Stay in India ≤729 days in preceding 7 years
Non-Resident (NRI)
If none of the above conditions are met, you are an NRI:
- Taxable only on Indian income
- No need to report global assets in ITR
- Foreign income is not taxable in India
How to Calculate Residential Status (Step-by-Step)
Step 1: Check total number of days stayed in India during FY 2024-25
Step 2: Check stay during last 4 preceding years (for 365-day condition)
Step 3: Determine if you cross 182/60/120-day thresholds
Step 4: Check if your Indian income exceeds ₹15 lakh
Step 5: Apply rules to classify yourself as Resident / RNOR / NRI
Step 6: File ITR based on correct status and tax only applicable income
Example Scenarios
- Example 1: Arvind stayed in India for 190 days in FY 2024-25
- Resident (≥182 days)
- Example 2: Priya is a US citizen visiting India for 130 days, earns ₹20 lakh in India
- Resident (≥120 days + Indian income > ₹15 lakh)
- Example 3: Ramesh stayed 50 days in India with ₹12 lakh Indian income
- Non-Resident (stayed <182 and <60, Indian income < ₹15 lakh)
Documents to Maintain
- Passport copies for all travel
- Visa and boarding details
- Indian salary slips, property documents, bank statements
- Form 26AS and AIS
- Details of global income and assets (if ROR)
Conclusion
Correct determination of your residential status is essential for tax filing in India, especially if you have foreign income, assets, or international movements. An incorrect status can lead to penalties, scrutiny, or misreporting of income.
Call to Action
Confused about whether you’re an NRI, RNOR, or full resident for tax purposes?
Let us do the exact calculation for your stay and tax exposure.
Book a tax residency consultation with Anshul Goyal, Chartered Accountant, and file your ITR with full clarity.
Visit: https://calendly.com/anshulcpa
Disclaimer
This blog is intended for educational purposes only. Residency determination under Indian tax law depends on exact travel records, income nature, and control over foreign income.
Frequently Asked Questions
1. Can I be an NRI one year and Resident the next?
Yes, residential status is determined year-wise based on days stayed.
2. Is global income taxable for NRIs?
No. Only Indian income is taxed for NRIs.
3. Who qualifies as RNOR?
If non-resident in 9 out of last 10 years or stayed ≤729 days in last 7 years.
4. Do I need to file Schedule FA if I am RNOR?
No. Only applicable if you are Resident and Ordinarily Resident.
5. What if I fail to disclose foreign assets?
Penalty up to ₹10 lakh per asset under Black Money Act if required to report.