Residential Status — Counted. Tested. Certified.

Residential status is the first question in every Indian tax computation and the one most often answered wrongly. Section 6 of the Income Tax Act, 1961 fixes status separately for each financial year on the basis of physical presence in India, without regard to citizenship, visa, domicile or intention. An individual is resident if present in India for 182 days or more during the financial year, or for 60 days or more during that year together with 365 days or more across the four preceding years.

Two relaxations soften the 60-day limb. An Indian citizen who leaves India in the year for the purpose of employment outside India, or as a crew member of an Indian ship, is tested at 182 days instead of 60. The same 182-day threshold applies to an Indian citizen or a person of Indian origin visiting India — but from Assessment Year 2021-22 that concession is cut to 120 days where the visitor’s total income other than income from foreign sources exceeds fifteen lakh rupees. Alongside this sits Section 6(1A), which deems an Indian citizen to be resident in India where his total income other than foreign-source income exceeds fifteen lakh rupees and he is not liable to tax in any other country by reason of domicile, residence or similar criteria.

Resident status then splits further. Section 6(6) treats a resident individual as “resident but not ordinarily resident” if he was a non-resident in nine out of the ten preceding years, or was present in India for 729 days or less across the seven preceding years; the 120-day visitors and the deemed residents under Section 6(1A) are also placed in this category. The distinction is decisive: an ordinarily resident individual is taxed on worldwide income and must disclose foreign assets, while a resident but not ordinarily resident individual is taxed broadly like a non-resident except for income from a business controlled from India. Getting the count right, day by day and year by year, is therefore not a formality.