Residential Status and Its Determination

The residential status of an assessee (individual, Hindu Undivided Family (HUF), or company) is crucial in determining the extent of their income that will be taxable under the Income Tax Act. The taxation of income varies depending on whether the assessee is classified as a Resident or a Non-Resident (NR). Additionally, within the category of Residents, there are further classifications: Resident and Ordinary Resident (ROR) and Resident but Not Ordinary Resident (RNOR).

Section 6: Residential Status of an Assessee

1. Individual (Section 6(1))

An individual can be classified as either a Resident or a Non-Resident. The classification is based on the number of days the individual has spent in India during the relevant financial year and the preceding years.

• Conditions for Resident Status:

  • Resident: An individual is considered a Resident if they satisfy at least one of the following conditions:
    1. Stay of 182 days or more during the relevant financial year (i.e., from April 1 to March 31).
    2. Stay of 60 days or more during the relevant year and at least 365 days in the preceding four years.
    Exception: For Indian citizens who leave India for employment or business purposes outside India or are in India for a tourist visit, the condition of staying for 60 days is extended to 182 days (as per amendments under the Finance Act).

• Non-Resident (NR):