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Who is a Non-Resident?
The term non-resident is negatively defined
under section 6 of the Income-tax Act. An individual who is
not a resident under the Income-tax Act is a non-resident
(generally, termed NRI). Thus, one should know the definition
of a resident and if he is not a resident then he is a non-resident.
The status of a person as a resident or non-resident
depends on his period of stay in India. The period of stay
is counted in number of days for each financial year beginning
from 1st April to 31st March (known as previous year under
the Income-tax Act). The definition is explained in simple
terms as under.
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If an individual who satisfies understated both the
conditions of section 6 of the Income-tax Act, then
he becomes a non-resident.
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| Condition |
Status |
| 1. |
He is not in India for 182
days or more during the relevant previous year. |
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If yes, then
he is a non-resident.
(so check the next condition.) |
| 2. |
He is not in India for 60
days or more during the previous year and he is not in
India for 365 days or more during the 4 years prior to
the previous year. |
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If yes, then
he is a non-resident. |
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If you are not satisfying above conditions
to become non-resident, check whether following assists
you to become a non-resident.
In the case of an individual on visit
to India or a member of the crew of an Indian
ship or a person leaving India for employment
outside India, the requirement of stay in India
of 60 days in condition 2 above is extended to
182 days
A NRI who has returned to India for
good is covered under the provisions of section 6(6)
of the Income-tax Act. He is given a special status
of RESIDENT BUT NOT ORDINARILY RESIDENT (RNOR)
if he satisfies one of the following conditions:
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| Condition |
Status |
| 1. |
He is not a resident, as per
the above provisions, for at least 9 out of 10 previous
years prior to the previous year under consideration. |
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If yes, he is
RNOR |
| 2. |
His stay in India during the
7 previous year prior to the previous year under consideration
should not be 730 days or more |
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If yes, he is
RNOR |
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- An individual who is non-resident for 2 consecutive
years, shall remain RNOR for 9 subsequent years and
as such his foreign income is not taxable in India
while his status RNOR. The status of RNOR renders
certain income of such individual non-taxable as explained
in {Tax liability of NRIs}
- It should be noted status as non-resident under
the Income-tax Act is misunderstood as status under
the Foreign Exchange Management Act 1999 (FEMA) .
The, criterias for deciding residential status under
the FEMA is different from that prescribed under the
Income-tax Act.
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