Residential Status and Scope of Total Income
What this domain tests
Residential status decides whether India taxes your global income or only India-source income. The exam tests the basic and additional conditions, the special rules for Indian citizens and crew, deemed residence, and the three statuses: resident and ordinarily resident (ROR), resident but not ordinarily resident (RNOR), and non-resident (NR).
Core rules
- Basic condition 1: stay in India for 182 days or more in the previous year.
- Basic condition 2: stay for 60 days or more in the previous year and 365 days or more in the four preceding previous years. For an Indian citizen leaving India for employment or as crew, or for a citizen or person of Indian origin visiting India, the 60-day condition is replaced by 182 days.
- A person who satisfies either basic condition is a resident. Deemed resident: an Indian citizen with Indian income above ₹15 lakh who is not liable to tax in another country may be treated as resident but is always RNOR.
- RNOR applies if the person is non-resident in nine of the ten preceding years, or has stay of 730 days or less in the seven preceding years.
- Scope: ROR is taxed on global income. RNOR is taxed on Indian income plus foreign income from a business controlled in India or a profession set up in India. NR is taxed only on Indian-source income.
Worked example
An individual stays in India for 200 days in the previous year. He satisfies basic condition 1, so he is resident. He was resident in India in eight of the ten preceding years and stayed 900 days in the seven preceding years. Because he was resident in at least two of the ten preceding years and stayed more than 730 days, he is ROR. His foreign salary for services rendered abroad is therefore taxable in India. If he had been RNOR, that foreign salary would generally fall outside the Indian tax net.
Traps
Do not apply the 60-day condition to every traveller; the 182-day substitution matters. Deemed residents are not automatically ROR. Stay includes the day of arrival and departure as notified.