Residential Status for Income Tax

What is residential status ?

To determine how much income tax you owe, it’s important that your residential status be declared on every year’s return. The three categories of Residential Status under the Indian Income Tax Act are:

The person has been in India for less than five years; They’re not considered a foreigner but also don’t qualify as an Indian citizen either (for example Hindu Jain s); And finally those who arrived before March 31, 1961 with foreign citizenship etc., which makes them exempt from paying any taxes relating to earned income

There are three types:

  1. Resident.
  2. resident but not ordinarily residents.
  3. non-resident aliens who owe no personal income tax to their home country.
how to determine residential status of an individual ?

As a resident of India, you must satisfy one or more conditions to qualify. For example:

  •  The taxpayer was in India for 182 days or more during a particular financial year, so he/she should file taxes with the Indian government.
  •  The taxpayer has been in India for at least 365 days during four of the past five years and is present on-site, 182 or more.

If an individual who is a citizen of India or person of Indian origin leaves for employment during the fiscal year, they will qualify as resident only if they stay in India for 182 days or more. However from 2020-21 onward this period has been reduced down to just 120 days with a total income exceeding 15 lakhs per annum (Indian Rupees).

 The government has announced some major amendments to the tax law in order for individuals who are not liable to tax anywhere else but India will be deemed residential status. The condition applies only if your total income exceeds Rs 15 lakh and there’s no liability towards taxes elsewhere due either by reason of domicile or residence; it does not matter which one you choose as long they meet these two criteria!

Resident, but not ordinary resident

In order to qualify as an ROR, one must meet both of these conditions:

1) Has been a resident of India in at least 2 out of 10 years immediately previous to the current one

2). It’s possible that you’ll have stayed there for 730 days during those other sevens, so make sure your application meets all conditions mentioned above—you don’t want them calling RNOR (Resident Nonexistent Person)!

Starting with the FY 2020-21, a citizen of India or someone who has Indian origins and leaves for employment outside will be considered as residents if they stay in excess of 182 days. This condition only applies when total income (other than foreign sources) exceeds Rs 15 lakhs; otherwise one is deemed to already reside there w/e it applies too!

non ordinary resident

The “Not Ordinary Residing” status of an individual means that he or she has not been resident in India for 9 out 10 previous years, OR during 729 days maximum within any specific period. It also applies to Hindu Undivided Family (HUF) where Manager was non-resident 8/10 times before tax year start date; therefore Huf manager is considered Not ordinarily Resident themselves even though they live outside!!

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