Income Tax Calculation – Residential Status

Determination of Residential status of Individual has to be done to ascertain which income is to be included in computing the total taxable income in India. There are 3 Types of Residential status.

1.      Resident & Ordinary Resident

2.      Resident But not Ordinary Resident

3.      Non –Resident

income tax calculation, residential status, non-resident, tax returns, indian income, foreign income

Residential Defination

Based on the duration for which individual present in India determine the residential status.

Resident: An individual is said to be resident in India in any previous year if he fulfills any one of the following two conditions:

i) He is in India in that year for a period of 182 days or more; (Should be determined total no days stay)

ii) He is in India for a period of 60 days or more during the previous year and 365 days or more during the 4 years preceding that previous year.

Resident and ordinarily resident: If any individual fails to satisfy below both conditions he will be treated as Resident and ordinary resident.

1.      He has been a non-resident in India in 9 out of the 10 preceding previous years;


2.      He has been in India for a period not exceeding 729 days during the last 7 years before the assessment year.

Resident, But not ordinarily resident: If an individual satisfy the conditions for Resident But does not fall under Ordinary resident defined above treated as not Ordinary resident.

Non-resident: If an individual does not satisfy any of the conditions that require to be qualifying as resident, will be considered as non-resident.

Income Tax Calculation and Residential Status: -

Taxability of income depends on Residential status of the individual and Income Nature. There are two type of income nature based on where you earned.

i)                   Indian Income

ii)                   Foreign Income

Indian Income: – If you earn or accrue income as follows treated as Indian income.

  • Income received and accrued in India during the previous year.
  • Income received in India and accrued in out side India during the previous year.
  • Income is received outside India during the previous year but it accrues in India during the previous year;

Foreign income: – Income neither received in India nor Accrued is treated as foreign income.

Indian Income is always taxable irrespective of the residential status.

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