COMPUTATION OF RESIDENTIAL STATUS OF INDIVIDUALS

2. MEANING AND PURPOSE
• The taxability of an individual in India depends upon his residential status in India
for any particular financial 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. ‘
• An individual may be a citizen of India but may end up being a non-resident for a
particular year.
• Similarly, a foreign citizen may end up being a resident of India for income tax
purposes for a particular year.
• Also to note that the residential status of different types of persons viz an individual,
a firm, a company etc is determined differently.

3. HOW TO DETERMINE
RESIDENTIAL STATUS?
For the purpose of income tax in India, the income tax
laws in India classifies taxable persons as:
•A resident
•A resident not ordinarily resident (RNOR)
•A non-resident (NR)

4. UNDER SECTION 6, THE RESIDENTIAL STATUS OF AN
INDIVIDUAL IS DIVIDED INTO THE FOLLOWING
CATEGORIES:

5. BASIC CONDITIONS [SEC. 6(1)]
Resident
A taxpayer would qualify as a resident of India if he satisfies one
of the following 2 conditions :
• 1. Individual assesse must be in India in the previous year for a
period atleast 182 days or More days
• or
• Individual assesse must be in India in the previous year for a period
atleast 60 days or More and 365 days or more during 4 years
preceding the Previous Year.

6. EXCEPTION TO BASIC CONDITIONS U/S 6(1)B
In the following cases, an individual has to stay in India for a period of
182 days or more in order to become resident in India during Previous
Year:
• An Indian citizen who leaves India during the previous year for the
purpose of taking employment outside India
• An Indian citizen leaving India during the previous year as a member of
the crew of an Indian ship
• An Indian citizen or a person of Indian origin who comes on visit to
India during the previous year. (a person is said to be of Indian origin if
either he or any of his parents or any of his grand parents was born in
undivided India)

7. :
• In case of an Indian citizen or a person of Indian origin comes on a visit to India
during the previous year, modified condition (ii) of sec. 6(1) is applicable:
Case I
Assesse total income, other than the income from foreign sources, exceeds 15 lakhs
during the previous year-
• Assesse is in India for a period of 120 days or more (but less than 182 days) during
the previous year and for 365 or more days during 4 previous years immediately
preceding the relevant previous year
Case II
Assesse total income, other than the income from foreign sources, does not exceed `15
lakhs during the previous year-
• Assesse is in India for a period of 182 days or more during the previous year and for
365 or more days during 4 previous years immediately preceding the relevant
previous year

9. Resident Not Ordinarily Resident
If an individual qualifies as a resident, the next step is to determine
if he/she is a Resident ordinarily resident (ROR) or an RNOR. He
will be a ROR if he meets both of the following conditions:
1. Has been a resident of India in at least 2 out of 10 years
immediately previous years and
2. Has stayed in India for at least 730 days in 7 immediately
preceding years
Therefore, if any individual fails to satisfy even one of the above
conditions, he would be an RNOR.

10. CONDITIONS TO BE SATISFIED
• Both Additional conditions satisfied → Individual assesse is
Resident and Ordinary Resident
• None or one of the Additional conditions → He is Resident but
not Ordinary Resident.

11. ILLUSTRATIONS
• 1. Mr. Arun, a Canadian citizen, comes to India for the first
time during PY 2016-17. During FYs 2016-17, 2017-18, 2018-
19, 2019-20 & 2020-21, he was in India for 55 days, 60 days,
90 days, 150 days & 70 days, respectively. Determine his
residential status for the AY 2021-22.
• Solution: During PY 2020-21, Mr. Arun was in India for 70
days & during Last 4 years, he was in India for 355 days (i.e.
55 + 60 + 90 + 150 days). Thus, he does not ANY of the basic
condition. Thus he is a Non Resident

12. • 2. Mr. D, an Indian citizen, leaves India on 22.9.2020 for the
first time, to work as an officer of a company in France.
Determine his residential status for the AY 2021-22.
• Solution: During PY 2020-21, Mr. D was in India for 175 days
(30+31+30+31+31+22 days). He does not satisfy the minimum
criteria of 182 days. Also, since he is an Indian citizen leaving
India for the purposes of employment, the second basic
condition is not applicable to him. Therefore, Mr. D is NR.

13. • 3. Mr. X is a citizen of Nepal. His grandfather was born near
Multan (Now in Pakistan) in 1945. He came to India for the
first time since 1986 on 2.10.2020 for a visit of 294 days. Find
his residential status for AY 2021-22.
• Solution: X's stay in India during PY 2020-21 is 181 days. Thus
he does not satisfy 1st Basic Condition. He is a person of
Indian origin because his grandfather was born in undivided
India & thus 2nd basic condition is not applicable in his case.
Therefore He is NR.

14. Mr. James a citizen of UK came to India for the first time on 1/5/2014 . He stayed here without any break for 3
years and left for Bangladesh on 1/5/2017. He returned to India on 1/4/2018 and went back to UK on 1/12/2018.
he was posted back to India on 20/1/2021. Find his residential status AY 2021-22.
Solution:
Stay in India during PY’s
Mr. James stayed 72 days and 365 days and more in 4 PPY , hence satisfy the second basic condition and
becomes resident, he also satisfy the both the additional condition therefore he is ordinary resident in India for
the assessment year 2021-22
Previous year Stay in India Status
2020-2021
2019-2020
2018-2019
2017-2018
2016-2017
2015-2016
2014-2015
72 Resident
Nil Non – Resident
245 Resident
31 Non- Resident
366 Resident
365 Resident
335 Resident
Resident
Non resident
Resident
Non resident
Resident
Resident
Resident

15. Mr. Ramesh a citizen of America comes to India for the first
time on 20/03/2020. On 1/9/2020 he leaves India for Nepal
on a business trip. He comes back on 26/02/2021. determine
his residential status for the assessment year 2021-22

16. Mr. Frank a citizen of west Indies was appointed as sales manager in
India on 1/4/2013 at Mumbai . On 25/1/2016 he went to Uganda on
deputation for the period of 3 years but left his wife and children in
India . On 1/5/2017 he came to India and took with him his family
to Uganda on 30th June 2017. he returned to India and joined his
original job on 24th January 2021