Determining the residential location of the taxpayer is equally important for the tax department as

verifying other documents. But why? Well, it is already known that the earnings of the registered
taxpayer from any source present (property or business) in India is taxable under the law. Another
major factor that determines the tax liability of an assessee is his residential status in the country
during the financial year.

As per experts, the residential status of the taxpayer means the number of days he was physically
present in the counry during a financial year and the preceding ten financial years. A Non
Resident/Resident but not ordinarily resident taxpayer has tax liability only on India-sourced
income/income received in India whereas a Resident and Ordinarily Resident is taxable on worldwide
income.

Categories of Taxpayer's Residential Status:

The government has made segments to classify the residential status of the taxpayers in India to put
them under categories of various taxable income. Look under which category you are.

Basic Needs for Resident

The cumulative duration of your stay in India during the relevant financial year is at le ast 182
a
days

The previous year you spent 60 days or more in India and in the 4 years immediately prior to the
b)
previous year you spent 365 days or more in ndia.

A citizen of India who leaves India for employment outside India in the previous year as a
member of the crew of an Indian ship or for the purposes of working abroad. During the
preceding year, he or she spent at least 182 days in India and at le ast 365 days during the
preceding four years.

An Indian citizen or person of Indian origin who has visited India in the past year for at least 182
days and 365 days within the last four years and is a citizen of India; b) 120 days or more during
d)
the previous year and 365 days or more within the preceding 4 years if the total income other
than income from foreign sources is over Rs 15 lakh.

Requirements for Residents, but Not for Ordinary Residents

a) During the last nine years, you have been a non-resident of India.

b) It has been at least 729 days since your last visit to India.

It is necessary that you are a citizen of India or a person of Indian origin outside of India who
comes to India on a visit, and your total income other than income from foreign sources is greater
C
than Rs 15 lakh and you have been in India for a period or periods totalling 120 days or more, but
no more than 182 days in the previous year.

A citizen of India who is not a resident of India under section (1) but is deemed to be a resident of
India under section (1A) has a total income of Rs 15 lakh over the previous year other than income
d)
from foreign sources and is not liable for tax in any other country or territory because of your
domicile or residence.
Resident and Ordinarily Resident (ROR)
Taxpayers are considered Residents and Ordinarily Residents if they meet one of two criteria:

" The total no. of days he stayed in India during the relevant financial year is 182 days or more.
" The total number of days he stayed in India during the current financial year is 60 days or more.
" If the total no. of days he stayed in India collectively for the past 4 financial years is 365 days.

For individuals with a total income of more than Rs 15 lakh other than from foreign sources, the period
will be reduced to 120 days or more as of the financial year 2020-21.

Read Also: Easy Explanation on TDS for Property Sale by NRL(2022 Guide)

Resident but Not Ordinarily Resident (RNOR)

If the taxpayer meets both conditions, he is considered an ordinary resident:
Taxpayers' collective stay in India should be 730 days or more for 7 consecutive financial years
preceding the current financial year.
" If he has been an Indian resident for at least 2 years from 10 previous financial years preceding the
current financial ye ar.

Therefore, if any individual fails to satisfy even one of the above conditions, he would be an RNOR.

Non-Resident (NR)
An individual satisfying neither of the conditions stated in (a) or (b) above would be an NR for the year.