Resident and Ordinarily Resident in India
In
the context of Indian Income Tax, the determination of an individual's residential
status is crucial because it affects the scope of their taxable income in
India. A person can be classified as Resident and Ordinarily Resident (ROR),
Resident but Not Ordinarily Resident (RNOR), or Non-Resident (NR)
based on specific conditions.
Resident and Ordinarily Resident (ROR)
An
individual is considered a Resident and Ordinarily Resident (ROR) in
India if they satisfy both the following conditions:
Condition 1: Residential Status
The
individual qualifies as a Resident in India. A person is treated as a Resident
if they meet either of the following basic conditions:
- Stayed in India for 182 days or more during the relevant financial year,OR
- Stayed in India for
60 days or more during the relevant financial year and for 365
days or more in the preceding 4 financial years.
(Note:
The 60-day requirement is extended to 182 days for Indian citizens or Persons
of Indian Origin (PIOs) who are visiting India or Indian citizens leaving India
for employment or as crew members of an Indian ship.)
Condition 2: Ordinarily Resident Status
To
be classified as Ordinarily Resident, the individual must fulfill both
the following additional conditions:
- Has been a Resident
in India for 2 or more out of the last 10 financial years
preceding the relevant year.
- Has stayed in India
for a total of 730 days or more in the last 7 financial years
preceding the relevant year.
If
these conditions are not met, the individual will be classified as a Resident
but Not Ordinarily Resident (RNOR).
Implications for Taxation of ROR
- Global Income
Taxable:
- An ROR is taxed on
their worldwide income, i.e., income earned or accrued in India as
well as outside India.
- Eligible for Tax
Relief:
- Tax treaties and
provisions like foreign tax credit may apply to avoid double taxation.
Example:
- Mr. A, an Indian
citizen, stayed in India for 200 days in FY 2023-24 and has been a
Resident in 8 out of the last 10 financial years, with over 1,000 days of
stay in the last 7 years.
- Mr. A is
classified as Resident and Ordinarily Resident (ROR) because he
satisfies both the residency and ordinariness conditions.
Post a Comment