Under the Income Tax Act, 1961, the residency status of an individual is determined based on the number of days an individual stays in India during a financial year (1st April to 31st March) and the preceding years.
✅ Section 6 of the Income Tax Act – Residential Status of an Individual
An individual is considered a Non-Resident (NR) in India if they do not satisfy any of the following two basic conditions:
🔹 Basic Conditions (Section 6(1)):
An individual is Resident in India if:
- Stayed in India for 182 days or more in the relevant previous year,
OR - Stayed in India for 60 days or more in the relevant previous year and 365 days or more in the 4 preceding previous years.
🔸 If neither of the above conditions is satisfied, the individual is a Non-Resident (NR).
🔹 Relaxation for Indian Citizens and PIOs (Deemed NR Cases):
The 60-day condition in the second clause is extended to 182 days for:
- An Indian citizen leaving India for employment outside India or as a member of a crew of an Indian ship.
- An Indian citizen or Person of Indian Origin (PIO) coming to India on a visit, if total income (excluding foreign income) is up to ₹15 lakhs.
If the income (excluding foreign income) exceeds ₹15 lakhs, then:
- The threshold of 60 days becomes 120 days (instead of 182 days), if total Indian stay is 120–182 days.
✅ Summary:
You are a Non-Resident in India if:
- You stay less than 182 days in India during the relevant financial year,
AND - You do not satisfy the 60 + 365 days condition mentioned above (or its modified version, if applicable to Indian citizens/PIOs).
✅ Resident but Not Ordinarily Resident (RNOR) – Definition under Indian Income Tax Act
Under Section 6(6) of the Income Tax Act, 1961, an individual who qualifies as a Resident (as per Section 6(1)) may still be classified as a “Resident but Not Ordinarily Resident (RNOR)”, based on certain conditions.
🔹 Who is an RNOR?
An individual is said to be Resident but Not Ordinarily Resident (RNOR) in India if:
- ✅ They qualify as a Resident under Section 6(1),
AND - ❌ They do not satisfy either of the following two conditions:a) The individual has been a resident in India in at least 2 out of the 10 preceding previous years,
AND
b) The individual has been in India for a period of 730 days or more during the 7 preceding previous years.
🔸 If both the above conditions are not fulfilled, the person is considered RNOR.
🔹 Special Provision (Amended in Budget 2020):
Even if someone satisfies the above conditions, the following will automatically be treated as RNOR:
- Indian citizen or Person of Indian Origin (PIO) having total income (excluding foreign income) exceeding ₹15 lakh during the previous year and staying in India for 120 days or more but less than 182 days – will be RNOR.
- An Indian citizen who is not liable to tax in any other country and has total income exceeding ₹15 lakh (excluding foreign income) will be deemed to be RNOR (if they stay in India for 182 days or more).
✅ Summary Table:
| Category | RNOR Status If |
|---|---|
| Regular Resident | Fails to meet both: 🔸Resident in 2 out of last 10 years 🔸Stayed ≥730 days in past 7 years |
| Indian Citizen/PIO with income > ₹15L | Stayed in India 120–181 days → RNOR |
| Indian citizen with income > ₹15L and not liable to tax in any other country | RNOR even if stays ≥182 days |
🔸 Tax Implications for RNOR:
- RNORs are taxed like Non-Residents.
- They are only taxed on:
- Income received or accrued in India, or
- Income from a business or profession controlled in India.
Foreign income is not taxable unless it is received or deemed to be received in India.
Here is a clear comparison chart between Resident (ROR), Resident but Not Ordinarily Resident (RNOR), and Non-Resident (NR) under the Income Tax Act, 1961:
✅ Comparison Table: Resident (ROR) vs RNOR vs Non-Resident (NR)
| Particulars | Resident & Ordinarily Resident (ROR) | Resident but Not Ordinarily Resident (RNOR) | Non-Resident (NR) |
|---|---|---|---|
| Residential Status | Fulfills basic conditions + both additional conditions | Fulfills basic conditions but fails at least one additional condition | Does not fulfill the basic conditions |
| Stays in India | ≥ 182 days OR 60+ days in current year and 365+ in last 4 years, plus: 🔸 Resident in 2 of last 10 years 🔸 730+ days in last 7 years |
Same basic condition as ROR, but fails 2 out of 10 years OR 730 days condition | <182 days in India in the financial year (generally) |
| Taxability in India | ✅ Global income taxable (Indian & foreign income) | ❌ Only income: 🔸 Received/accrued in India 🔸 From business controlled or profession set up in India |
❌ Only Indian-sourced income taxable |
| Foreign Income Taxed? | ✅ Yes | ❌ Only if from India-controlled business/profession | ❌ No |
| Suitable For | Long-term residents | Recently returned NRIs / temporary residents | Individuals living abroad with short visits to India |
| Disclosure of Foreign Assets in ITR | ✅ Mandatory | ❌ Not required | ❌ Not required |
| DTAA (Double Tax Avoidance Agreement) | May avail | May avail | May avail |
🔹 Definitions Summary:
| Status | Criteria Summary |
|---|---|
| ROR | Resident in India as per Sec 6(1) + Resident in at least 2 of last 10 years + stayed ≥730 days in last 7 years |
| RNOR | Resident in India as per Sec 6(1), but not resident in 2 of last 10 years or stayed <730 days in last 7 years |
| NR | Did not satisfy basic conditions of stay in India |