Status 1 — Resident and Ordinarily Resident (ROR)

Full resident status — worldwide income is taxable in India. To qualify as Resident, one of these two conditions must be met in the current financial year:

• Condition A: Present in India for 182 days or more in the current financial year, OR
• Condition B: Present in India for 60 days or more in the current financial year AND 365 days or more in the preceding four financial years combined.

If Resident — an additional check determines whether Ordinarily Resident. Both of these must also be satisfied:

• Resident in India for at least 2 of the preceding 10 financial years, AND
• Present in India for 729 days or more in the preceding 7 financial years

If resident but these two are not both satisfied — status is RNOR (see Status 3 below).

Status 2 — Non-Resident Indian (NRI)

Neither Condition A nor Condition B from Status 1 is satisfied. Simple — and unambiguous once days are correctly counted.

Tax scope as NRI: only India-source income is taxable in India. Foreign salary, foreign FD interest, foreign capital gains — completely exempt from Indian income tax.

Status 3 — Resident but Not Ordinarily Resident (RNOR)

A special intermediate status — primarily relevant for those who have been abroad for years and are returning to India permanently. You are Resident by the day count (Condition A or B satisfied) — but either of the following is true:

• NRI for 9 or more of the preceding 10 financial years, OR
• Present in India for 729 days or fewer in the preceding 7 financial years

Tax scope as RNOR: India income is taxable + foreign business income controlled from India. But normal foreign passive income (foreign salary, foreign bank interest, foreign capital gains) is generally exempt — making RNOR a significant transitional benefit for returning NRIs.

• Financial year: April 1 to March 31. Not calendar year. Count days only within this window.
• Date of arrival AND date of departure both count: If you arrive on April 5 and leave on April 20 — that is 16 India days (both endpoints included).
• Transit does not count: If you are at an Indian airport for a connecting flight and do not clear immigration — those hours are not counted as India days.
• Medical, family, vacation visits — all count: The reason for being in India is irrelevant. Any physical presence in India counts toward the day total.
• Keep a travel log: Passport stamps, flight bookings, immigration records. A simple spreadsheet — date in, date out, days — allows precise calculation. The inability to count accurately is what creates the “two CAs two answers” problem Sundar faced.

Introduced in Budget 2020 — Section 6(1A). This rule applies if ALL THREE conditions are simultaneously true:

1. You are an Indian citizen (Indian passport holder)
2. You are not liable to pay tax in any other country or territory by reason of your domicile, residence, or any other criteria (i.e., you live in a zero-income-tax country — UAE, Bahrain, Qatar, Kuwait, Saudi Arabia)
3. Your India-source income exceeds ₹15 lakh in the financial year

Vikram spent 12 years in the UK. FY 2025-26 — he returns to India permanently. Full year in India = 365 days.

Vikram’s RNOR Tax Position

What Vikram Should Do Before RNOR Ends

• NRE FD maturity timing: Arrange all NRE FDs to mature within the RNOR period (2–3 years). After RNOR — NRE interest becomes taxable as full ROR.
• UK investment realisation: If any UK capital gains are planned (selling UK shares, UK property) — realise within RNOR period. After RNOR — same gain is fully taxable in India.
• Foreign account restructuring: Review all foreign accounts and investments with a CA before RNOR period ends. Once full Resident, worldwide assets must be declared in Schedule FA — and restructuring at that stage is more complex.
• UK pension considerations: If UK pension receipts are expected — check India-UK DTAA provisions for pension income and whether RNOR or ROR status affects taxability in India.

1. 1Pull your complete travel record for the financial year
   Passport stamps, immigration records, flight bookings. Build a spreadsheet: date of entry to India, date of exit, number of days (both endpoints inclusive). Total all India days for the year (April 1 to March 31).
2. 2Apply Condition A — 182-Day Test
   Total India days ≥ 182 → Resident (go to Step 4). Less than 182 → continue to Step 3.
3. 3Apply Condition B — 60/182-Day Test
   Are you an Indian citizen employed outside India? If yes — threshold in Condition B is 182 days, not 60. If no (OCI, foreign passport) — threshold is 60 days.
   Current year days ≥ 60 (or 182 for Indian citizens abroad) AND India days in preceding 4 years ≥ 365 → Resident (go to Step 4).
   If either part fails → NRI. Stop here.
4. 4If Resident — Check RNOR Conditions
   Either of these true → RNOR:
   (a) NRI for 9 or more of the preceding 10 financial years, OR
   (b) India days in preceding 7 financial years ≤ 729
   If neither is true → Full Resident (ROR).
5. 5If NRI with India income > ₹15L — Check Deemed Resident
   Indian citizen? Living in a zero-income-tax country (UAE, Saudi, Qatar, Kuwait, Bahrain)? India income above ₹15L? All three → verify Deemed Resident status with CA.

Mistake 1 — Assuming “I live abroad = NRI”: Not true if India visits during the year total 182+ days. Many NRIs who return for extended periods — family health emergencies, extended weddings, sabbaticals — cross the 182-day threshold and become Resident without realising it. This changes their entire tax position for that year — worldwide income becomes taxable.

Mistake 2 — Using calendar year instead of financial year: India’s financial year is April 1 to March 31. If you count January to December — you are counting the wrong period. The 182-day count must be for the April-March window.

Mistake 3 — Counting transit airport time as India days: Clearing immigration and entering India = India day. Sitting in an airport lounge for a connecting flight without clearing immigration = NOT an India day. Only days where you actually entered India and were physically present count.

Mistake 4 — Not using the RNOR window for planning: Returning NRIs who do not know about RNOR status miss 2–3 years of tax-free foreign income, tax-free NRE FD interest, and freedom from Schedule FA foreign asset declaration. The planning for RNOR — NRE FD maturity timing, foreign investment liquidation — must happen before RNOR ends. After it ends, the opportunities are gone.

Mistake 5 — Gulf NRIs ignoring the Deemed Resident rule: Indian citizens in UAE, Saudi Arabia, Qatar with India income above ₹15 lakh should verify Deemed Resident status with a CA every year. This rule is relatively new (Budget 2020) and many Gulf NRIs are unaware of it.

Mistake 6 — Maintaining NRE/NRO accounts after becoming full Resident: FEMA violation — the account must be converted. Banks generally remind customers — but do not always proactively convert. The NRI’s responsibility is to inform the bank when status changes and initiate conversion.

Mistake 7 — Not declaring foreign assets after becoming full Resident: Schedule FA in ITR requires declaration of all foreign bank accounts, foreign immovable property, foreign financial interests, and foreign income. Penalty for non-disclosure: ₹10 lakh per item under the Black Money (Undisclosed Foreign Income and Assets) Act. This penalty applies even if the assets are not taxable — the obligation is disclosure, not payment.