Vidushi Agrawal
Quick Summary
Residential status has taken much relevance with the Corona Virus pandemic. Due to globally imposed restrictions on the movement of people many tourists and residents of another country are stuck in India. As per income tax, a foreign citizen may end up being an Indian resident liable to pay tax fo
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FAQ :
Residential status is determined by the number of days an individual resides in India. If an individual, whether a citizen or not, stays in India for more than a specified number of days, they are considered a 'Resident' and liable to pay taxes to the Indian government on their taxable income.
An individual will be considered a 'Resident' in India if they stay in India for 182 days or more in a year, or if they stay in India for 60 days or more in a year AND 365 days or more during the preceding 4 years.
Yes, the 60-day rule is replaced with 182 days for Indian citizens leaving India for employment or as a crew member. It's also 182 days for Indian citizens or persons of Indian origin visiting India with Indian income up to Rs. 15 Lakhs, and 120 days for those with Indian income exceeding Rs. 15 Lakhs.
An individual is classified as RNOR if they have been classified as NRI in 9 out of the last 10 years, have stayed in India for less than 730 days in the last 7 years, or are an Indian citizen/person of Indian origin earning over Rs. 15 lakhs and visiting India for more than 120 days but less than 182 days, while spending over 365 days in the preceding 4 years.
The Finance Bill 2020 inserted Section 6(1A), which deems certain Indian citizens or persons of Indian origin with Indian income exceeding Rs. 15 lakhs, who are not tax residents of any other country, as 'Resident' in India. Such deemed residents are always RNOR.
Residents are taxed on income from Indian sources, Indian business/profession earned outside India, and foreign sources. Non-Ordinary Residents are taxed on income from Indian sources and Indian business/profession earned outside India, but not foreign sources. Non-Residents are only taxed on income earned from Indian sources.
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