RESIDENT / NON RESIDENT / NOT ORDINARY RESIDENT

Basically residential status is determined for the Taxation purpose which also depends on the physical presence of the taxpayer in India in the course of the "previous year" which would be the twelve months from April 1 to March 31.

Now for more simplification we will assume as

Y => This Year and for other years we will use + / -

A person is said to be "resident" in India in any previous year if he -

(a) Is in India in that year (Y-1) for an aggregate period of 182 days or more; or

(b) having within the four years (Y-2 to Y-5) preceding that year been in India for a period of 365 days or more, is in India in that year (Y-1) for an aggregate period of 60 days or more.

However, as a special concession for Indian citizens and foreign citizens of Indian origin, the period of 60 days referred to in Clause (b) above, will be extended to 182 days in two cases:

(i)                  Where an Indian citizen leaves India in any year for employment outside India; and

(ii)                Where an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India.

In the above context, an individual visiting India several times during the relevant "previous year" (Y-1) should note that judicial authorities in India have held that both the days of entry and exit are counted while calculating the number of days stay in India, irrespective of however short the time spent in India on those two days may be.

A "non-resident" is merely defined as a person who is not a "resident" i.e. one who does not satisfy either of the two prescribed tests of residence.

An individual, who is defined as Resident in a given financial year is said to be "not ordinarily resident" in any previous year if he has been a non-resident in India 9 out of the 10 preceding previous years or he has during the 7 preceding previous years been in India for a period of, or periods amounting in all to, 729 days or less.

For other details / queries, drop a mail at prashant.singh@sbi.co.in