{"id":3369,"date":"2021-09-30T01:41:58","date_gmt":"2021-09-30T01:41:58","guid":{"rendered":"https:\/\/www.kanakkupillai.com\/new-learn?p=3369"},"modified":"2025-08-26T15:45:52","modified_gmt":"2025-08-26T10:15:52","slug":"residential-status","status":"publish","type":"post","link":"https:\/\/www.kanakkupillai.com\/learn\/residential-status\/","title":{"rendered":"Residential Status of Individuals, Firms, Companies Under Income Tax Act"},"content":{"rendered":"

When it comes to paying income tax<\/a> in India, the first question is not about numbers, but about whether I am a resident or a non-resident.<\/p>\n

This one question decides your whole tax journey, and the answer to this question decides whether you will be taxed only on income earned in India. The Income Tax Act, 1961, lays down detailed rules for determining the residential status of different types of taxpayers, individuals, Hindu Undivided Families (HUFs), firms (including Limited Liability Partnership), and companies. It is pertinent to note that these rules are not based on your nationality or citizenship, but on where you actually live, how long you have lived, and whether the management of your business is during a financial year.<\/p>\n

In this blog, we will understand the residential status of individuals, Hindu Undivided Families (HUFs), firms (and similar entities), and companies incorporated in India.<\/p>\n

Basic Test for Individuals<\/h2>\n

Under Section 6(1) of the Income Tax Act, 1961<\/a>, an individual (and similarly, an HUF) is classified as resident if they meet either of two eligibility tests:<\/p>\n

    \n
  1. 182 days or more in India during the year; or<\/li>\n
  2. 60 days or more in that year and 365 days or more over the previous four years combined, though for Indian citizens or persons of Indian origin, this 60-day threshold can be raised to 182 days under certain conditions.<\/li>\n<\/ol>\n

    Categories of Resident<\/h2>\n

    Once you are deemed a resident, you are further classified as:<\/p>\n

    1. Resident and Ordinarily Resident (ROR):<\/h3>\n

    If you have been a resident for 2 out of the last 10 years and have stayed in India for 730 days or more during the previous 7 years, then you shall be resident, and you have to pay tax in India on your total income from anywhere in the world.<\/p>\n

    \u201cAnywhere in the world\u201d<\/em> means the income earned in India or outside India<\/p>\n

    2. Resident but Not Ordinarily Resident (RNOR):<\/h3>\n

    If you fail at least one of the ROR criteria, you are RNOR. In simple language, you are a resident but not ordinarily resident if either:<\/p>\n