Residential Status in India for Income-tax Act 1961: Complete Guide (as amended by Finance Act 2026)
Residential status is the foundation on which an assessee’s Indian income-tax liability is computed. The scope of income chargeable to tax in India depends directly on whether an assessee is treated as a resident or a non-resident, and in the case of individuals and HUFs, on whether such residency is ordinary or not ordinary.
This article explains, in a practical and structured manner, how residential status is determined under the Income Tax Act 1961, incorporating the changes introduced by the Finance Act, 2026.
Important:
- All references are as per the Income Tax Act 1961, as amended by the Finance Act, 2026.
- “Income” in the thresholds below refers to total income other than income from foreign sources.
1. Broad Classification of Residential Status
Under the Income Tax Act 1961, an assessee is first classified as either:
- Resident in India, or
- Non-resident in India
For individuals and Hindu Undivided Families (HUFs) who are residents, there is a further split:
- Resident and Ordinarily Resident (ROR)
- Resident but Not Ordinarily Resident (RNOR)
The categories therefore are:
Individual
- Resident and Ordinarily Resident (ROR)
- Resident but Not Ordinarily Resident (RNOR)
- Non-resident
Hindu Undivided Family (HUF)
- Resident and Ordinarily Resident (ROR)
- Resident but Not Ordinarily Resident (RNOR)
- Non-resident
Other persons (companies, firms, AOPs, BOIs, etc.)
- Resident
- Non-resident
2. Residential Status of Individuals – Core Principles
For individuals, the residential status for a previous year is primarily determined on the basis of:
- Number of days of physical presence in India
- Citizenship (Indian or foreign)
- Whether the person is a Person of Indian Origin (PIO)
- Purpose of visit to or departure from India
- Quantum of Indian-sourced income (excluding foreign income)
- Whether the individual is liable to tax in any other country based on domicile, residence, or similar criteria
An individual’s residential status is determined separately for each previous year.
Note:
An individual becomes non-resident if he does not satisfy any of the residency conditions applicable to him for that year.
3. Indian Citizens Visiting India
3.1 Indian Citizen Visiting India – Income* Less Than Rs. 15 lakhs
Where an Indian citizen comes to India on a visit and has income* below Rs. 15 lakhs during the previous year:
When is he treated as Resident?
- If his stay in India during the current previous year is 182 days or more, he will be treated as a resident.
When is he treated as Resident but Not Ordinarily Resident (RNOR)?
If he is a resident based on the above condition, he will be classified as Resident but Not Ordinarily Resident if either of the following is true:
- His total stay in India is 729 days or less during the 7 preceding previous years, or
- He was non-resident in 9 out of the 10 preceding previous years
If neither of these RNOR conditions is met, he will be treated as Resident and Ordinarily Resident (ROR).
3.2 Indian Citizen Visiting India – Income* More Than Rs. 15 lakhs
If an Indian citizen visits India and has income* exceeding Rs. 15 lakhs during the previous year:
Resident conditions
He will be treated as resident if:
- His stay in India during the current previous year is 182 days or more.
Additionally, there is a special deemed resident/RNOR rule in this scenario:
- If his stay in India is 120 days or more but less than 182 days in the current previous year, and
- His stay in India is 365 days or more in the 4 immediately preceding previous years,
then he is treated as resident.
RNOR classification
Once treated as resident under the above conditions, the RNOR rules apply as under:
- If his stay in India is 729 days or less in the previous 7 years, or
- He is non-resident in 9 out of the 10 preceding previous years,
he will be classified as Resident but Not Ordinarily Resident.