Residential Status under Income Tax Act 1961

Types of Resident in Income Tax

As per Indian Income Tax laws, an individual’s residential status can be of the following types:

As per Section 6(1) of Income Tax Act, for individuals to be deemed as residents, they have to satisfy the following criteria:

· They reside in India for 182 days or more within a fiscal year.

· If they stay for 730 days or more in India within a time-period of 7 years before the current financial year.

· In case they have resided in India for 365 days or more within 4 years preceding the previous year and fall under the ordinary resident category.

Now, according to Section 6(6), individuals have to satisfy the following criteria to come under Resident and Ordinarily Resident:

· If they have stayed in India for a minimum of 2 years in the last 10 financial years preceding the current year.

· In case they spend 730 days or more in the country in the last 7 years before the current financial year.

To be classified as a Resident but Not Ordinarily Resident, individuals need to satisfy the following criteria:

· In case they resided in India for 730 days or more in the last fiscal year.

· If they stayed in India for a minimum of 2 out of 10 days in the last financial year.

In order to classify as a non-resident, individuals need to adhere to the following requirements:

· In case they stay in India for less than 182 days within a financial year.

· If they reside in India for a time period not exceeding 60 days within a fiscal year.

· In case they stay in India for a period exceeding 60 days but not 365 days or more in the last 4 financial years.

The benefits of having a tax residency certificate are as follows: