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For the purpose of Income-tax Law, an individual can have any one of the following RS:

1.    ROR

2.    RNOR and

3.    NR

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An individual is considered as a Resident in India under the Act if –

1.    he stays in India for 182 days or more in a Financial Year (FY); or

2.    he is in India for 60* days or more in a FY and for 365 days or more in preceding 4 FYs.

*However, the condition of stay of 60 days is extended as below for the following individuals:

Ans. If an individual does not satisfy any of the conditions for being a Resident in India as mentioned in above FAQ 2, he/she shall be considered as a NR in India.

Ans.

A new provision is introduced vide Finance Act 2020 wherein an individual is deemed to be “Resident” in India in the relevant previous year, irrespective of number of days of stay in India, if the following conditions are satisfied –

a.    Individual is Citizen of India;

and

b.    has total income exceeding Rs. 15 lakhs (other than income from the foreign sources) in India during the previous year;

and

c.    who is not liable to tax in any other country or territory by reason on his domicile or residence or any other criteria of similar nature.

As per Press Release dated February 2, 2020, the above provisions will not apply to those individuals who are bonafide workers in other countries including Middle East, and who are not liable to tax in the said countries.

For instance: Indian Citizen working in UAE is not liable to pay taxes in UAE as there are no tax laws in UAE. As per Press Release, he /she will not be considered as deemed to be ‘Resident’ in India, since he/she is a bonafide worker in UAE.

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If an individual is a Resident of India for a particular FY (as mentioned in FAQ 2 above),

and

if the said individual satisfies any of the below mentioned conditions, he shall be considered as RNOR in India

• If the said individual is a NR in India for 9 FY out of 10 preceding FYs.
• If his stay in India during the 7 years preceding the previous year under consideration is 729 days or less.
• He / she is a citizen of India or PIO and comes to India for visit, having total income of more than Rs. 15 lakhs during the previous year (other than income from foreign sources) and his stay in India in the previous year is 120 days or more but less than 182 days (As per recent amendments vide Finance Act 2020).
• He / she is a citizen of India who is deemed to be resident in India as defined in above FAQ 4 (As per recent amendments vide Finance Act 2020). 

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If an individual does not satisfy all of the additional conditions as mentioned in above FAQ, then he/she shall be considered as ROR in India.

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The expression "income from foreign sources" has been defined under the Act to mean as income which accrues or arises outside India except income derived from a business controlled in or a profession set up in India.

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A person shall be deemed to be of PIO if he/she, or either of his/her parents or any of his/her grand-parents, was born in undivided India.

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Generally, while calculating the number of days of stay in India, date of arrival and date of departure in India shall be treated as days of stay in India. Normally, dates stamped on Passport are considered as proof of departure from and arrival in India.

However, in case where an individual is a Citizen of India and a member of the crew of a Indian Ship, on a voyage having originated from any port in India, with destination being any port outside India or vice versa, then number of days of stay in India for the said individual, shall not include the period beginning on the date entered into the Continuous Discharge Certificate (CDC) in respect of joining the ship and ending on the date entered into the CDC in respect of signing off from the ship.

Ans.

Mr. A in the aforesaid case stays in India for 92 days during FY 2020-21.

As per provisions of the Act, as the condition of stay in India for less than 182 days for RS to be NR (refer FAQ 2), is applicable only to an Indian Citizen who leaves India for the purpose of employment. Accordingly, in the above example, as Mr. A, an Indian Citizen is leaving India for the purpose of employment and as his stay in India is 92 days which is less than 182 days during the FY, therefore, RS of Mr. A for FY 2020-21 shall be NR.

It may be noted that the same conditions may not be applicable in case of family members of Mr. A, who are accompanying him when he leaves India for the purpose of employment abroad, as they may not be leaving India for the purpose of employment.

Ans.

As explained above, the benefit of stay in India for 182 days in case of an individual who leaves India for the purpose of employment is available only to an Indian Citizen. As in the above example, Mr. A is not an Indian Citizen; he would not be eligible to claim benefit of 182 days, even though he is a PIO.

In the above example, as his stay in India in FY 2020-21 exceeded 60 days and we understand for the 4 years preceding the FY 2020-21 exceeded 365 days, his RS would be Resident of India.

Ans.

As Mr. X is a PIO who has come to India for visit and has total income of Rs. 8,00,000/- during FY 2020-21, based on the table as provided in Answer to FAQ 2 above, the criteria of 182 days in current FY and 365 days or more during 4 years preceding the current year would be applicable to him.

Mr. X in the aforesaid case stays in India for 123 days during FY 2020-21, which is less than 182 days and even though his total number of days stay in India for 4 years preceding the previous year i.e. FY 2020-21 is 400 days i.e. greater than 365 days, but  he will be ‘NR’ in India as one of the conditions of being in India for more than 182 days is not satisfied.

Ans.

Yes. If in the above example, the total income of Mr. X is Rs. 20,00,000/-, then the criteria of 120 days shall be applicable to him and not 182 days.

Accordingly, since he stays in India for 123 days and his total number of days stay in India during 4 years preceding FY 2020-21 is 400 days, he shall be considered as ‘Resident’ in India.

Further, he shall be considered as ‘RNOR’ of India since as answer to FAQ 4. above, he is a PIO and having total income of more than Rs. 15,00,000 during the FY 2020-21 and his stay in India in the previous year is between 120 days and 182 days.

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In the above example, Mr. X will be considered as ‘NR’ in India, as even if his total income during FY 2020-21 is more than Rs. 15 lakhs and he satisfies the condition of stay in India for more than 120 days, he does not satisfy the second condition of stay in India for more than 365 days in last 4 years preceding FY 2020-21.

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As he/she is leaving India for the purposes of employment, being an Indian citizen, he/she will become a resident in India only if his/her stay in India for the concerned FY is 182 days or more. Hence, he/she should leave India on or before September 28 to maintain status of NR for that FY. This is on the basis that he/she does not return to India for any visits personal/ official until the end of such FY.

If he/she fails to do so, he / she will qualify as ROR and by virtue of taxation rules will be taxed on global income for residents, subject to DTAA benefits. There will also be an obligation to report foreign assets in India. Thus, he/she may need to plan his/her departure and subsequent visit appropriately keeping in mind the tax provisions.

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On the basis that he/ she was a NR in the previous FYs, she/he should try to come back on or after February 1 (or February 2 in case of a leap year). However, if her/his stay in India in prior 4 previous FYs does not exceed 365 days, then she/he may return after October 2 (or October 3 in case of a leap year). In both the cases, she/he will continue to remain NR for that FY.

Ans.

The expression ‘employment’ may also include business and self-employment.

So, in case of a person, who is an Indian citizen, and leaves India for self-employment or business outside India, then only the condition of stay in India for less than 182 days may be applicable for RS to be NR.

Accordingly, he/she shall be a NR for FY 2020-21 under the provisions of the Act, as his/her stay in India is less than 182 days for the said FY.

The same provisions may not apply for the family members accompanying such person.

Ans.

The condition of stay in India for less than 182 days may be applicable for RS to be NR only in case of a person who is an Indian Citizen and leaves India for employment outside India.

However, in the above case, the individual is leaving for education purpose and not employment, so the condition of physical presence of 60 days during the FY and the more than 365 days during the immediately preceding 4 FYs is required to be evaluated.

As he is going outside India for first time and has been in India for more than 60 days during the FY 2020-21 and since he has been ‘Resident’ for 9 FY out of 10 preceding FYs and more than 729 days in 7 preceding years prior to FY 2020-21, he will qualify as ROR.

Updated 01/2023

Ans.

"Person resident in India" means—

(i)          a person residing in India for more than one hundred and eighty-two days during the course of the preceding FY but does not include—

A.   a person who has gone out of India or who stays outside India, in either case—

·        for or on taking up employment outside India, or

·        for carrying on outside India a business or vocation outside India, or

·        for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

B.   a person who has come to or stays in India, in either case, otherwise than—

·        for or on taking up employment in India, or

·        for carrying on in India a business or vocation in India, or

·        for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

Explanation:

a)   The residential status of a person leaving India will be determined as under:

If a person leaves India for the purpose of employment, business or for any other purpose that indicates his intention to stay outside India for an uncertain period; then he becomes a person resident outside India from the day he leaves India for such purpose.

b)   The residential status of a person returning to India will be determined as under:

If a person comes to India for the purpose of employment, business or for any other purpose that indicates his intention to stay in India for an uncertain period; then he becomes a person resident in India from the day he comes to India for such purpose.

Under FEMA, stay for a period of 182 days is also stated. However, it shall be noted that the residential status of a person in our opinion is primarily determined basis the intention of the person to stay in India.

(ii)         any person or body corporate registered or incorporated in India.

(iii)        an office, branch or agency in India owned or controlled by a person resident outside India.

(iv)        an office, branch or agency outside India owned or controlled by a person resident in India.

"Person resident outside India" means a person who is not a resident of India.

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It is observed that when students leave India for education for specified duration, such stay outside India may exceed the period officially intended. While taking up studies, or further advance courses, students may have to take up job or seek scholarship to supplement income to meet their financial requirements abroad. As students have to earn and learn and may even borrow, their stay for educational purposes gets prolonged than what is intended when leaving India.

It is clear that their stay and intention to stay outside India is for an uncertain period when they go abroad for their studies; they are treated as Person resident outside India as per the circular issued by RBI.

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Ans.

Person of Indian Origin (PIO) means a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

·        Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

·        Who belonged to a territory that became part of India after the 15th day of August, 1947; or

·        Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or

·        Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

Ans.

The Constitution of India does not allow holding dual citizenship i.e. Indian citizenship and citizenship of a foreign country simultaneously.

However, after repeated demand from persons of Indian origin for allowing dual citizenship, Government in 02.12.2005 started Overseas Citizen of India scheme. However, it is to be noted OCI is not dual citizenship of India. Registration as an OCI provides the registrant few benefits as specified below FAQ 9. 

However, as per Gazette notification No. 26011/01/2014IC.I published on 09.01.2015 all the existing PIO card holders registered as such under new PIO Card scheme 2002, shall be deemed to be Overseas Citizens of India Cardholder (OCI).

Therefore from 09.01.2015, one can only register as OCI cardholder and existing PIO cardholders may be considered as OCI. cardholders.

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Following categories of foreign nationals are eligible for registration as Overseas Citizen of India (OCI) Cardholder:-

·        Who was a citizen of India at the time of, or at any time after the commencement of the Constitution i.e. 26.01.1950; or

·        Who was eligible to become a citizen of India on 26.01.1950; or

·        Who belonged to a territory that became part of India after 15.08.1947; or

·        Who is a child or a grandchild or a great grandchild of such a citizen (mentioned above); or

·        Who is a minor child of such persons mentioned above; or

·        Who is a minor child and whose both parents are citizens of India or one of the parents is a citizen of India; or

·        Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A of the Citizenship Act, 1955 and whose marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the presentation of the application.

Ans.

Yes. However, if either of the child’s parents or grandparents or great grandparents is or had been a citizen of Pakistan, Bangladesh or such other country as the Central Government may, by notification in the Official Gazette, specify, the child will not be eligible for registration as an Overseas Citizen of India Cardholder.

Ans.

Few major benefits of becoming an OCI are as below:-

·        A multiple entry/ multi- purpose life-long visa for visiting India

·        Exemption from registration with local police for any length of stay in India

·        OCI may be granted Indian citizenship after 5 years from date of registration provided he/she stays in India for 1 year before making application and citizenship of other country is renounced.

·        Employment allowed in all areas except mountaineering, missionary and research work and other work requiring PAP/RAP (PAP-protected area permit, RAP- Restricted area permit)

·        Parity with NRIs in financial, economic and educational fields except in the acquisition of agricultural or plantation properties.

Ans.

Yes. He/ she has to make a declaration renouncing the Card registering him/ her as an OCI Cardholder to the Indian Mission/ Post/ FRRO from where the registration as OCI Cardholder was granted. After receipt of the declaration, the Indian Mission/ Post/ FRRO shall issue an acknowledgement in the prescribed form. Upon such registration of the declaration, the person shall cease to be an OCI Cardholder.

Further, where a person ceases to be an OCI Cardholder, the spouse of the foreign origin of that person who has obtained OCI Card under clause (d) of sub-section (1) of section 7A and every minor child of that person registered as an OCI Cardholder shall thereupon cease to be an OCI Cardholder

Ans.

Yes. Passport is the primary travel document. OCI is only a life-long visa. Stay by a foreigner in India without a valid passport is illegal even if he or she is an OCI cardholder. Therefore, it is necessary that OCI cardholders staying in India should have a valid passport at all times during his/ her stay.

  Updated 03/2023