Residential Status

Residential status determines the extent to which a person’s income is taxable in India. It affects whether only Indian income or worldwide income must be reported in the Income Tax Return.

Residential status is determined separately for every financial year or tax year. A person who was a non-resident in one year may become a resident in another year depending on the number of days spent in India and other prescribed conditions.

Which Income-tax Act applies?

Types of residential status for an individual

An individual may be classified as:

• Resident and Ordinarily Resident (ROR)
• Resident but Not Ordinarily Resident (RNOR)
• Non-Resident (NR)

Basic conditions for becoming a resident

An individual is generally treated as a resident in India if either of the following conditions is satisfied:

1. The individual stays in India for 182 days or more during the relevant year; or
2. The individual stays in India for 60 days or more during the relevant year and for 365 days or more in total during the four immediately preceding years.

If neither condition is satisfied, the individual is generally treated as a non-resident, subject to the deemed-resident rule explained below.

Special rules for Indian citizens and persons of Indian origin

Indian citizen leaving India for employment

For an Indian citizen leaving India during the year for employment outside India, the 60-day requirement is replaced by 182 days. The same relaxation applies to an Indian citizen leaving India as a crew member of an Indian ship.

Indian citizen or person of Indian origin visiting India

For an Indian citizen or person of Indian origin who ordinarily lives outside India and visits India:

• If income, excluding income from foreign sources, does not exceed ₹15 lakh, the 60-day requirement is replaced by 182 days.
• If such income exceeds ₹15 lakh, the 60-day requirement is replaced by 120 days.

Therefore, a visiting Indian citizen or person of Indian origin with income exceeding ₹15 lakh may become resident when:

• the stay in India is at least 120 days during the relevant year; and
• the total stay in India is at least 365 days during the four preceding years.

A person is generally considered to be of Indian origin if that person, either parent or any grandparent was born in undivided India.

Deemed resident rule

An Indian citizen may be treated as a deemed resident of India if all the following conditions are satisfied:

• Income, excluding income from foreign sources, exceeds ₹15 lakh during the relevant year;
• The person is not liable to tax in any other country or territory because of domicile, residence or another similar criterion; and
• The person is not already resident in India under the normal day-count tests.

A person treated as a deemed resident is classified as Resident but Not Ordinarily Resident.

When is a resident treated as RNOR?

A resident individual is treated as Resident but Not Ordinarily Resident if any applicable condition below is satisfied:

• The individual was non-resident in India in nine out of the ten preceding years;
• The individual stayed in India for 729 days or less during the seven preceding years;
• An Indian citizen or person of Indian origin with income exceeding ₹15 lakh becomes resident under the special 120-day rule and stays in India for at least 120 days but less than 182 days; or
• The individual is treated as a deemed resident.

A resident who does not satisfy any RNOR condition is treated as Resident and Ordinarily Resident.

How residential status affects taxable income

Where a person qualifies as a resident under the domestic laws of both India and another country, the applicable Double Taxation Avoidance Agreement may contain tie-breaker rules for determining treaty residence.

Residential status of an HUF

A Hindu Undivided Family is resident in India unless the control and management of its affairs is situated wholly outside India.

A resident HUF is treated as RNOR if its manager or Karta:

• was non-resident in nine out of the ten preceding years; or
• stayed in India for 729 days or less during the seven preceding years.

If neither condition is satisfied, the resident HUF is treated as ordinarily resident.

Residential status of companies and other persons

Place of Effective Management means the place where the key management and commercial decisions necessary for conducting the business of the company as a whole are, in substance, made.

Examples

Example 1: Stay of 190 days

An individual stays in India for 190 days during the relevant year. The 182-day condition is satisfied. The individual is resident and must then check the RNOR conditions to determine whether the final status is ROR or RNOR.

Example 2: Indian citizen visiting India

An Indian citizen living abroad visits India for 130 days. Income excluding foreign-source income is ₹18 lakh, and the individual stayed in India for at least 365 days during the preceding four years. The individual becomes resident under the special 120-day rule and is treated as RNOR because the stay is between 120 and 181 days.

Example 3: Deemed resident

An Indian citizen has income exceeding ₹15 lakh, excluding foreign-source income, is not liable to tax in any other country because of residence or a similar criterion, and does not satisfy the normal residence tests. The individual is treated as a deemed resident and classified as RNOR.

Documents needed to determine residential status

Keep the following documents and workings:

• Current and old passports containing immigration stamps;
• Travel tickets, boarding passes and travel history;
• Employment contract, work visa or overseas assignment letter;
• Evidence of arrival and departure dates;
• Foreign tax residency certificate or proof of tax liability, where relevant;
• Indian and foreign income computation;
• Day-count calculation for the current and preceding years; and
• Documents relating to control and management, in the case of an HUF, firm, company or other entity.

Common mistakes

• Assuming that an Indian passport automatically makes a person resident in India;
• Confusing income-tax residential status with FEMA residential status;
• Considering only one continuous visit and ignoring other visits during the year;
• Ignoring the preceding four-year, seven-year or ten-year conditions;
• Applying the 182-day relaxation without checking the ₹15 lakh threshold;
• Failing to check the deemed-resident provision;
• Selecting “Resident” in the ITR without determining whether the correct status is ROR or RNOR; and
• Using the residential status of the previous year without performing a fresh calculation.

Reporting residential status in the ITR

The correct status must be selected in the personal information or filing-status section of the applicable Income Tax Return. Depending on the ITR form, additional information may be required, including:

• Number of days stayed in India during the relevant year;
• Number of days stayed in India during preceding years;
• Country of residence and Taxpayer Identification Number;
• Passport details;
• Whether the individual is an Indian citizen or person of Indian origin; and
• Foreign income, foreign tax relief or foreign-asset information, where applicable.

Conclusion

Residential status is based on statutory conditions and must be determined separately for each year. Individuals should first apply the applicable day-count tests, check the special provisions for Indian citizens and persons of Indian origin, and then determine whether a resident is ROR or RNOR.

The Income-tax Act, 2025 continues the core residence rules for Tax Year 2026-27 onwards. However, FY 2025-26 and AY 2026-27 remain governed by the Income-tax Act, 1961.

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