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Ascertain your likely residential status for Financial Year 2020-21

The Finance Act, 2020 brought the following changes in the criteria for determining the residential status of an individual.

  • Currently, for an Indian citizen or a person of Indian origin (PIO) outside India and coming to India on visits, amongst other conditions, the period of stay in India to trigger residency is extended from 60 to 182 days or more during the financial year (FY).
  • In line with its existing provisions of the Income-tax Act, 1961 (‘Act’), the Finance Act, 2020 now also provides that an Indian citizen or PIO having total income, other than income from foreign sources*, exceeding INR1.5 million would qualify as ‘resident but not ordinarily resident’ (RNOR) in India if he or she is present in India for 120 days or more but less than 182 days during the relevant FY.
  • The Finance Act, 2020 provides that an Indian citizen would be deemed to be RNOR if such an individual is not liable to tax in any other country or territory by reason of residence or domicile (or any other prescribed criteria of similar nature) in that country and his total income, other than income from foreign sources*, exceeds INR1.5 million in the relevant FY.

*The Finance Act, 2020 explains that income from foreign sources for the purpose of ascertaining residential status would mean income that accrues or arises outside India except income derived from a business controlled in or a profession set up in India.