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Check if you are Resident or Non Resident under Income Tax Act ?

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Many NRIs are not aware that the he concept of “Non-resident” is different under  Income Tax Act  & under FEMA.

Under Income Tax Act, the status depends on the actual number of days for which one stays in India.

A person is Resident in India

1) if he is in India for more than 182 days during the fiscal, beginning 1 April and ending 31 March.

OR

2) If he is in India for 60 days or more during the year and 365 days or more during the earlier 4 fiscals. If you fulfil both these conditions, you are regarded as a tax resident of India, though you have been in India for less than 182 days.

There are two relaxations available from this period of 60 days, which provide relief to many NRIs, preventing them from becoming tax residents of India.The 60 days clause will be replaced by 182 days in following cases :

1) The first relaxation applies only to an Indian citizen, who leaves India for the purposes of employment outside India or as a member of the crew of an Indian ship during the relevant year.

Therefore, a person leaving India for taking up a job outside India would not be a tax resident of India, if he is in India for less than 182 days during the relevant fiscal.

2) The second relaxation applies not only to Indian citizens but also to PIOs as defined under tax laws.  The benefit is available if such a person is outside India and comes on a visit to India during the fiscal. Under tax law, a PIO is a person who, or either of whose parents, or any of his grandparents, was born in undivided India.

Therefore, most NRIs who come to India to visit their relatives once a year and stay for a couple of months, or a little longer, need not fear becoming tax residents of India and having their worldwide income taxed in India.

Under Foreign Exchange Management Act, 1999 (FEMA), Number of Days of stay in India is not relevant. NRI is defined as  person resident outside India who is a citizen of India. Person who stays outside India for the purpose of employment or carrying on business or vocation outside India or any other circumstances which indicate his intention to stay outside India for an uncertain period.

He is treated as NRI irrespective of the number of days of his  stay in India or otherwise. provided he has not returned to India for taking up employment or carrying on business or vocation or any other circumstances as would indicate his intention to stay in India for an uncertain period.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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10 comments

  1. For AY2015-16 I am Resident as per ITAct but NRI as per FEMA.Please clarify how shd I file my return to claim excess tax paid, as Resident or as NRI ?

  2. I was working in US for the last 3 years and just returned back to India and I’m now a resident of India. Could you please tell me when I file the return for AY 2015-2016, should I file as resident or NRI?

  3. Hi – Can you please let me know if there has been a change in the number of days used to calculate the NRI status? I heard from someone that post Sept 2015, the rules are changing – i.e. if a person stays in India for more than 50 days, he/she shall be considered as a resident and will lose the NRI status.

    Me and my wife live in the U.S. and are on H1B / H4 visas respectively. We plan to visit India this year for 4 months. Would we lose our NRI status if we come for 4 months?

    Thanks,
    Puneet

    • Hi Puneet,

      I donot think that any changes are proposed regarding the number of days required for NRI status. It is still 182 days.

  4. Hi Vivek

    How are you! I have conferred with you in the past.

    Can you please clarify if I will be classified as an NRI under FEMA for FY 2016-17 as per following details:

    FY 2011-12 and all years before that – Resident Indian

    FY 2012-13, FY 2013-14, FY 2014-15, FY 2015-16 – NRI – less than 60 days in India in each year – employed outside India and paying tax on Salary outside India

    FY 2016-17 – planning to return to India on 30th October 2016 with an intention to live in India henceforth, however contract of employment is ending on 31st Aug 2016, but Residence VISA is valid till 12th Nov 2016, so staying back till 30th October

    Regards, Jai

    • Hi Jai, As per FEMA, you will be resident as you will be in India with intention to remain in India for uncertain period.

      But for all pratical purposes, residence as per Income Tax act is calculated. As per that, youl will be non resident as you will be in India for less than 182 days.

  5. How can we file ITR file NRIs,whose Gross income is zero and have deductions like 80C,80D and TDS.

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