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.