Residential status under the Income-tax Act determines whether an individual’s global income is taxable in India or only Indian-source income. Non-resident Indians (NRIs), returning Indians, and expatriates must track days of stay and tie-breaker rules in double taxation avoidance agreements (DTAA).
Status can change year to year; incorrect classification leads to under-reporting of foreign income or unnecessary tax on worldwide income. Banks apply TDS at higher rates for NRIs on many payments.
This article explains basic tests for ROR, RNOR, and NR classification.
Basic residential tests — Section 6
Resident in India
An individual is resident if either:
- In India for 182 days or more in the relevant previous year; or
- In India for 60 days or more in the year and 365 days or more in the four preceding years.
For Indian citizens/Person of Indian Origin visiting India, 60 days is extended to 182 days in specified conditions; crew members on Indian ships have special day-counting rules.
Resident and ordinarily resident (ROR)
A resident is ROR if both:
- Resident in at least 2 out of 10 preceding years; and
- In India for 730 days or more during 7 preceding years.
ROR is taxable on worldwide income with credit for foreign taxes under Section 90/91.
Resident but not ordinarily resident (RNOR)
A resident who does not satisfy the ROR tests is RNOR. RNOR status is also available for specified returning Indians for transitional years under Section 6(6).
RNOR is taxed like NR on foreign income except income derived from business controlled in or profession set up in India — only such foreign income linked to Indian operations is taxable.
Non-resident (NR)
NR is taxable only on income received or deemed received in India or accruing or arising in India. Salary for services rendered in India, capital gains on Indian assets, and interest on NRO accounts are typically taxable.
Summary table
| Status | Indian income | Foreign income (general) |
|---|---|---|
| ROR | Taxable | Taxable |
| RNOR | Taxable | Exempt except business/profession linked to India |
| NR | Taxable if source in India | Not taxable |
NRI compliance essentials
- File ITR in India if total income exceeds basic exemption before giving effect to Chapter VI-A.
- Report foreign assets in Schedule FA if ROR — critical for RNOR transitioning to ROR.
- FEMA: NRE/NRO/FCNR account rules; repatriation of sale proceeds of property.
- DTAA relief — Form 10F, tax residency certificate, and TDS at treaty rate.
Planning for return to India
Track days of stay; plan asset liquidation and trust structures before becoming ROR. Consider RNOR window for orderly inclusion of foreign income.
General professional information only. Residential status is fact-specific; obtain advice with passport and travel records.