The Finance Act of 2020, effective from the Assessment Year 2021-22, introduced an amendment in the rule of determining NRI status
To ascertain whether an individual qualifies as a Non-Resident Indian (NRI), it is crucial to determine their residential status as outlined in Section 6 of the Income-tax Act. According to this section, an individual is considered a non-resident in India (NRI) if they do not meet the criteria for resident status. The conditions for being deemed a resident are as follows:
(1) If the individual is present in India for 182 days or more during the previous year.
(2) If the individual is in India for 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.
For Indian citizens or persons of Indian origin visiting India, the 60-day requirement mentioned in (2) is extended to 182 days. Similar concessions apply to Indian citizens leaving India for employment or as crew members in any previous year.
The Finance Act of 2020, effective from the Assessment Year 2021-22, introduced an amendment in the rule of determining the NRI status of an individual. As per the amendment, the 60-day period in (2) would be replaced with 120 days if an Indian citizen or a person of Indian origin, whose total income (excluding income from foreign sources), exceeds Rs. 15 lakhs during the previous year. Income from foreign sources refers to income accruing or arising outside India, excluding income derived from a business controlled or a profession set up in India.
Additionally, the Finance Act introduced Section 6(1A), deeming an Indian citizen a resident in India only if their total income (excluding income from foreign sources) exceeds Rs. 15 lakhs during the previous year. However, this classification applies only if the individual is not liable to pay tax in any country or jurisdiction based on domicile, residence, or similar criteria.
For the purpose of determining Indian origin, a person is considered of Indian origin if they, their parents, or any grandparents were born in undivided India.
Starting from the Assessment Year 2021-22, an Indian citizen with a total income exceeding Rs. 15 lakhs (excluding income from foreign sources) is deemed a resident in India, provided he is not liable to pay tax in any other country.
To know the detail I-T provisions applicable for NRIs CLICK HERE
To Know about the Expected Income Tax reliefs from Budget 2024 CLICK HERE
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I-T Dept Intensified Scrutiny on NRIs and Asks for Number of Days Stay in India
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