The condition for deemed residential status applies only if the total income (other than foreign sources) exceeds Rs 15 lakh and nil tax liability in other countries or territories by reason of his domicile or residence or any other criteria of similar nature. In another significant amendment from FY 2020-21, an individual who is a citizen of India who is not liable to tax in any other country will be deemed to be a resident in India. However, from the financial year 2020-21, the period is reduced to 120 days or more for such an individual whose total income (other than foreign sources) exceeds Rs 15 lakh.
Such individuals are allowed a longer time greater than 60 days and less than 182 days to stay in India. In the event an individual who is a citizen of India or person of Indian origin leaves India for employment during an FY, he will qualify as a resident of India only if he stays in India for 182 days or more. Stay in India for the immediately 4 preceding years is 365 days or more and 60 days or more in the relevant financial year Stay in India for a year is 182 days or more orĢ. ResidentĪ taxpayer would qualify as a resident of India if he satisfies one of the following 2 conditions :ġ. Before we get into taxability, let us first understand how a taxpayer becomes a resident, an RNOR or an NR. The taxability differs for each of the above categories of taxpayers. A resident not ordinarily resident (RNOR).In this article, we have discussed about how the residential status of an individual taxpayer can be determined for any particular financial yearįor the purpose of income tax in India, the income tax laws in India classifies taxable persons as: Also to note that the residential status of different types of persons viz an individual, a firm, a company etc is determined differently.
Similarly, a foreign citizen may end up being a resident of India for income tax purposes for a particular year. An individual may be a citizen of India but may end up being a non-resident for a particular year. The term residential status has been coined under the income tax laws of India and must not be confused with an individual’s citizenship in India. The taxability of an individual in India depends upon his residential status in India for any particular financial year. Meaning and importance of residential status Budget 2021 update: FM proposes to notify rules for removing hardship for NRI due to double taxation.
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