Discussed given below are the10 crucial Insights  that must be known to any one to decide residential status of a person in India for tax purpose.

 

Residential status of a person must be decided separately each year. A person may be a resident in a year but he/ she may not be considered as such in preceding year or succeeding year. A person who was resident in a year may become non resident or not ordinarily resident in another year.

 

Example : 

Sachin Mishra, an Indian IT professional, frequently travels abroad for work. His residential status under Indian tax law has varied across years due to changes in his physical presence in India.

In the financial year 2021–22 (Assessment Year 2022–23), Sachin stayed in India for 210 days, qualifying as a Resident and Ordinarily Resident (ROR). His global income was taxable.

In 2022–23 (AY 2023–24), he was posted to Germany and stayed in India for only 95 days. Though he met the 4-year cumulative condition, he didn’t meet the 182-day rule, making him a Resident but Not Ordinarily Resident (RNOR). Only his Indian income was taxable.

In 2023–24 (AY 2024–25), Sachin visited India for just 45 days. He failed both conditions for residency and was classified as a Non-Resident (NR). Only income earned or received in India was taxable.

This case highlights that residential status must be determined separately each year. A person may be a resident in one year and a non-resident in another, depending on  stay and circumstances. The classification directly impacts the scope of taxable income.

Residential status of a person ,for tax purpose, is not decided based on his/her citizenship or domicile or place of birth or nationality. A person may be resident of two or more countries in respect of the same year.

 

Example

Sulekha Pathak, born in India and holding Indian citizenship, lived abroad for the entire financial year of 2024-25 without visiting India. Despite her nationality and birthplace, she will be treated as a non-resident under the Income Tax Act as per the provisions sec. 6(1) (a). This case shows that citizenship, domicile, or place of birth do not affect residential status—only physical presence does.

 

 A person may stay in any part of India and for any length of time in any part of India. The purpose of the stay is not material in deciding residential status.

What is taken into consideration is total number of days stay in India in any year for determining residential status for tax purpose in that year.

 

Example :

Rodrigz Marfolis , A Ugandan citizen, stayed in India for 190 days during the financial year 2024-25, primarily for his medical treatment. Despite the non-business nature of his visit, he qualified as a resident under the Income Tax Act.

 

For determining residential status ,the day of leaving india and the day of returning India should be taken as day of stay in India.

 

 Example: 

Mr. Rajiv, an Indian citizen, travels abroad for employment.

• Leaves India: 10th July 2024
• Returns to India: 15th March 2025

Financial Year Considered: 1st April 2024 to 31st March 2025

 Calculation of Days Stayed in India

• Stay before departure: 1st April to 10th July 2024 → 101 days(Including 10th July as a day of stay in India)
• Stay after return: 15th March to 31st March 2025 → 17 days(Including 15th March as a day of stay in India)

Total days in India during FY 2024–25:
101 + 17 = 118 days

 Conclusion

Since both the day of leaving (10th July) and day of returning (15th March) are counted as days of stay in India, Mr. Rajiv’s total stay is 118 days. This is less than 182 days, so he would be considered a Non-Resident (NR) for that financial year under Section 6 of the Income Tax Act.

 

 

5.A person if either he/she or his/her parents or grandparents were born in undivided India, is considered a person of Indian Origin(PIO).

Definition: Person of Indian Origin (PIO)

According to the Citizenship Act, 1955, a person is considered to be of Indian origin if:

• He/she, or
• Either of his/her parents or grandparents

was born in undivided India (i.e., India before 15 August 1947, including present-day Pakistan and Bangladesh).

 Example:

Anita was born in the UK in 1990. She is a British citizen.

• Her grandfather, Ramesh, was born in Lahore in 1930 (then part of undivided India).
• Her grandmother, Meena, was born in Delhi in 1935.

Conclusion: Even though Anita was born outside India and holds foreign citizenship, she qualifies as a Person of Indian Origin because her grandfather and grandmother were born in undivided India.

This status is important for eligibility under various Indian laws, such as applying for Overseas Citizen of India (OCI) cards or investing in Indian assets.

 

India means territory of India, its territorial waters, continental shelf, exclusive economic zone( up to 200 nautical miles) and airspace above its territory and territorial waters.

 

 Definition: What Constitutes “India” in Legal Terms

Under Indian law, especially the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976, the term “India” includes:

• Land territory of India
• Territorial waters: up to 12 nautical miles from the baseline
• Continental shelf: seabed and subsoil beyond territorial waters
• Exclusive Economic Zone (EEZ): up to 200 nautical miles from the baseline
• Airspace above land and territorial waters

This definition is crucial for taxation, defense etc.

 Example: Oil Drilling in the Arabian Sea

   ONGC (Oil and Natural Gas Corporation) sets up an offshore oil rig 180 nautical miles off the coast of Mumbai in the Arabian Sea.

• The rig is not within India’s land territory
• It lies outside the 12 nautical mile territorial waters
• But it is within the 200 nautical mile Exclusive Economic Zone

Legal Implication: Even though the rig is far from the coast, it is considered part of India’s sovereign economic territory. So:

• India has exclusive rights to explore and extract resources there
• Any income generated from this rig is taxable under Indian law
• The airspace above the rig is also under Indian jurisdiction

Another Example: Aircraft Flying Over Territorial Waters

If a foreign aircraft flies over the airspace above India’s territorial waters, it must comply with Indian aviation laws. This airspace is treated as part of India’s sovereign territory, just like land.

 

In case arrival in India and departure time from India is not available, then the day of arrival to India and Day of departure from India is counted as stay in India.

 

For determining residential status, what is considered is total number of days stay of a person in India. It is not necessary to stay continuous or consecutively.

Concept: Total Days of Stay in India — Not Necessarily Continuous

For determining residential status under Section 6 of the Income Tax Act, what matters is the total number of days a person stays in India during a financial year (1st April to 31st March).
The stay does not need to be continuous or consecutive.

Example: Mr. Arjun’s Multiple Visits

Scenario: Mr. Arjun, an NRI, visits India multiple times during the financial year 2024–25:

• Visit 1: 1st April to 30th April 2024 → 30 days
• Visit 2: 15th August to 15th September 2024 → 32 days
• Visit 3: 1st January to 28th February 2025 → 59 days

Total stay in India:
30 + 32 + 59 = 121 days

Conclusion

Even though Mr. Arjun’s visits were not continuous, his total stay in India during the financial year is 121 days. This count is used to determine his residential status, not whether he stayed in India in one stretch.

If he also stayed in India for 365 days or more in the preceding 4 years, and meets the income threshold, he may be treated as a Resident but Not Ordinarily Resident (RNOR).