Deemed Resident, ROR & RNOR Explained - Income Tax Act 2025

Determining whether an individual is a resident or non-resident is only the first stage of establishing residential status for income-tax purposes. If an individual qualifies as a resident, it is also necessary to determine whether the person is a Resident and Ordinarily Resident (ROR) or a Resident but Not Ordinarily Resident (RNOR).

In addition, the Income-tax Act contains a special deemed residency provision for certain Indian citizens who are not liable to tax in another country.

These distinctions are important because the scope of income taxable in India can vary considerably depending on whether a person is ROR, RNOR or non-resident.

What Are ROR and RNOR?

For income-tax purposes, a resident individual can broadly fall into one of two categories:

• Resident and Ordinarily Resident (ROR)
• Resident but Not Ordinarily Resident (RNOR)

A person first needs to qualify as a resident in India under the applicable basic residential-status conditions. Once residency has been established, the individual's past residential history and period of stay in India are considered to determine whether the person is ROR or RNOR.

The Act also specifies certain situations in which an individual is automatically treated as RNOR.

When Is an Individual Resident and Ordinarily Resident?

An individual would generally qualify as Resident and Ordinarily Resident where both of the following additional conditions are satisfied:

1. The individual has been a resident in India in at least 2 out of the 10 tax years immediately preceding the relevant tax year; and
2. The individual has stayed in India for 730 days or more in aggregate during the 7 tax years immediately preceding the relevant tax year.

Example

Suppose Neel qualifies as a resident of India for Tax Year 2026-27.

During the 10 tax years preceding Tax Year 2026-27:

• He was resident in India for 6 tax years; and
• His total stay in India during the preceding 7 tax years was 1,050 days.

Since Neel was resident in at least 2 of the preceding 10 tax years and stayed in India for at least 730 days during the preceding 7 tax years, he would qualify as Resident and Ordinarily Resident (ROR) for Tax Year 2026-27.

When Is an Individual Resident but Not Ordinarily Resident?

An individual may be treated as Resident but Not Ordinarily Resident where the person is resident for the relevant tax year but does not satisfy the conditions required for ordinarily resident status.

An individual is not ordinarily resident where either of the following applies:

• The individual was non-resident in India in 9 out of the 10 tax years immediately preceding the relevant tax year; or
• The individual's total stay in India was 729 days or less during the 7 tax years immediately preceding the relevant tax year.

Therefore, a person who has recently returned to India after living abroad for a significant period may become resident in the current year but still qualify as RNOR because of the person's residential history.

Example

Priya had been living outside India for several years and returned permanently during Tax Year 2026-27.

She stayed in India for 200 days during Tax Year 2026-27 and therefore qualifies as resident.

However, during the seven tax years preceding Tax Year 2026-27, her total stay in India was only 420 days.

Since her cumulative stay during those seven years does not exceed 729 days, Priya would be treated as Resident but Not Ordinarily Resident (RNOR) for Tax Year 2026-27.

Special RNOR Rule for Certain Visitors to India

A special rule applies to an Indian citizen or Person of Indian Origin (PIO) who is living outside India and visits India during the relevant tax year.

Where:

• Total income other than income from foreign sources exceeds ₹15 lakh;
• The individual's stay in India during the tax year is 120 days or more but less than 182 days; and
• The applicable conditions for becoming resident are satisfied,

the individual is treated as Resident but Not Ordinarily Resident.

This means that an overseas Indian who becomes resident because of the modified 120-day rule does not become ROR merely because the residency threshold has been crossed. Such a person is specifically treated as RNOR.

Example

Arjun is an Indian citizen residing outside India. During Tax Year 2026-27:

• He visits India for 140 days;
• His total stay in India during the preceding four tax years is 420 days; and
• His total income other than income from foreign sources is ₹24 lakh.

Since his relevant income exceeds ₹15 lakh, the modified 120-day condition applies.

He has stayed in India for more than 120 days during Tax Year 2026-27 and more than 365 days during the preceding four tax years.

He would therefore qualify as a resident. However, because his stay is at least 120 days but below 182 days under this special provision, he would be treated as RNOR.

What Is a Deemed Resident?

Normally, residential status is closely connected with the number of days an individual stays in India.

However, the Income-tax Act also contains a special concept of deemed residency.

Under this provision, an Indian citizen may be treated as resident even where the ordinary physical-stay tests do not make that person resident.

An individual can be deemed to be resident for a tax year where the prescribed conditions are satisfied, including:

• The individual is a citizen of India;
• Total income, other than income from foreign sources, exceeds ₹15 lakh during the tax year; and
• The individual is not liable to tax in any other country or territory by reason of domicile, residence or another criterion of a similar nature.

A deemed resident is treated as Resident but Not Ordinarily Resident (RNOR).

Can a Person Become Deemed Resident Without Staying in India?

Yes.

The deemed residency provision is unusual because an Indian citizen may potentially become a deemed resident even without satisfying the normal stay-based conditions.

Stay in India is not necessary for deemed residency where the statutory conditions are otherwise fulfilled.

However, deemed residency does not apply where the person is already resident in India under the regular residential-status provisions.

Who Can Be a Deemed Resident?

The deemed residency rule applies specifically to an Indian citizen.

This distinction is important because the 120-day visitor rule may apply to both Indian citizens and PIOs, whereas the deemed residency provision applies only to Indian citizens.

Meaning of “Liable to Tax”

The expression “liable to tax” is important when determining deemed residency.

For this purpose, a person is considered liable to tax in a country where an income-tax liability exists under the law of that country.

The definition also includes a person who has subsequently been exempted from such tax liability under that country's law.

Therefore, whether a person actually paid tax is not by itself the only factor. The relevant consideration is whether the person is liable to tax under the law of that country.

What Is Income from Foreign Sources for the ₹15 Lakh Test?

For the ₹15 lakh threshold used in the special visitor and deemed residency provisions, it is necessary to understand the expression income from foreign sources.

Broadly, it means income which:

• Accrues or arises outside India; and
• Is not deemed to accrue or arise in India.

However, income derived from a business controlled in India or a profession set up in India is excluded from the meaning of income from foreign sources for this purpose.

Therefore, such income may have to be considered while determining whether the ₹15 lakh threshold has been exceeded.

ROR, RNOR and Deemed Resident at a Glance

Why Does the Difference Between ROR and RNOR Matter?

The distinction determines how far India's taxing rights can extend to income earned outside India.

Resident and Ordinarily Resident

An ROR is generally taxable in India on income:

• Received or deemed to be received in India;
• Accruing or arising or deemed to accrue or arise in India; and
• Accruing or arising outside India.

In simple terms, an ROR is generally subject to tax in India on global income, subject to applicable exemptions and other provisions.

Resident but Not Ordinarily Resident

An RNOR has a narrower scope of taxation.

Apart from income received, accrued or deemed to accrue or arise in India, certain foreign income may also become taxable where it is derived from a business controlled in India or a profession set up in India.

Other foreign income which does not fall within these conditions may remain outside the scope of total income in India.

This is why correctly identifying whether a returning individual is ROR or RNOR can be particularly important where the individual has overseas employment income, foreign investments, rental income or businesses outside India.

Common Mistakes While Determining ROR and RNOR

1. Treating “Resident” and “ROR” as the Same

Becoming resident in India does not automatically mean that the person is ordinarily resident. The historical tests must also be examined.

2. Looking Only at the Current Year's Stay

The ROR/RNOR determination requires reviewing earlier tax years. The individual's status in the preceding 10 years and total stay during the preceding 7 years may be relevant.

3. Applying Deemed Residency to a PIO

Deemed residency applies to an Indian citizen, not merely to a person of Indian origin.

4. Ignoring the ₹15 Lakh Threshold

The ₹15 lakh threshold is relevant for special visitor rules and deemed residency and should be calculated after considering the prescribed meaning of income from foreign sources.

5. Assuming “No Tax Paid Abroad” Means “Not Liable to Tax”

Whether a person is liable to tax depends on the applicable law of the foreign country. Actual payment of tax and liability to tax are not necessarily the same thing.

Practical Checklist

While determining an individual's residential classification for Tax Year 2026-27, check:

1. Whether the individual qualifies as resident under the basic conditions.
2. Whether any special rule for an Indian citizen or PIO applies.
3. The individual's residential status during the preceding 10 tax years.
4. Total stay in India during the preceding 7 tax years.
5. Whether the person's relevant income exceeds ₹15 lakh.
6. Whether the person is an Indian citizen or only a PIO.
7. Whether the person is liable to tax in another country.
8. Whether the special 120-day or deemed residency provisions apply.

Conclusion

The classification of an individual as ROR, RNOR or deemed resident is an important part of determining the scope of taxable income in India.

A person may qualify as resident based on the current year's stay but still remain RNOR because of the individual's past residential history. Certain overseas Indian citizens or persons of Indian origin may also become RNOR under the special 120-day rule, while specified Indian citizens who are not liable to tax elsewhere may fall within the deemed residency provision.

Residential status should therefore be determined carefully for each tax year, taking into account not only the person's stay in India but also previous years' residence, foreign income, citizenship and liability to tax in other jurisdictions.

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