Residential Status for NRI in India: A Simple & Complete Guide.

If you're an NRI living abroad, one of the most confusing things to figure out every year is your residential status in India. Many NRIs assume they automatically remain “non-resident” just because they live overseas. But under the Income Tax Act, this status changes every financial year, depending entirely on how many days you spend in India.

And this status matters more than most people realise — because it decides:

• Whether your foreign income becomes taxable in India
• How much TDS is deducted from your investments
• Which income do you need to report on your Indian tax return
• Whether you get DTAA benefits

So, understanding your residential status is the first step to avoiding unnecessary taxes, penalties, and confusion.

Let’s break it down in a simple way.

Why Should NRIs Care About Residential Status?

Because your tax rules change completely based on this status.

• As an NRI, only your Indian income is taxable; things like rent, capital gains, interest, and salary earned in India.
• If your status shifts to RNOR, some foreign income may still stay exempt.
• But if you become ROR, then your global income becomes taxable in India, and you also have to report foreign assets.

That's why every year, before filing your tax return, you should quickly reassess where you stand: NRI, RNOR, or ROR.

How Does India Determine NRI Residential Status?

The Income Tax Act uses the number of days you stay in India. You are considered a Resident in India if any one of these is true:

• You stay in India for 182 days or more in a financial year, OR
• You stay in India for 60 days in a year + 365 days in the last four years

There is one special rule:

If you're an Indian citizen or PIO who has Indian income above ₹15 lakh , then instead of 60 days, the limit becomes 120 days.

If you don't meet these day-count tests, then you qualify as an NRI for that year.

Sounds simple enough, right? Let’s now see what happens to your taxes in each category.

Tax Rules for NRI, RNOR and ROR — Explained Simply

1. If you're an NRI (Non-Resident Indian)

You are taxed ONLY on income earned or received in India, such as:

• Salary earned in India
• Rental income from property
• Capital gains (shares, mutual funds, property)
• Interest on NRO account

Your foreign income is not taxable in India. This is the most tax-friendly category.

2. If you're an RNOR (Resident but Not Ordinarily Resident)

Think of RNOR as a transition phase between NRI and full resident.

You are taxed on:

• Income earned in India
• Income from a business or profession that is controlled from India

You are not taxed on most foreign income.

This category often helps returning NRIs avoid immediate global income taxation.

3. If you're ROR (Resident and Ordinarily Resident)

Here’s where everything changes.

As an ROR, you must:

• Pay tax on global income
• Report all foreign assets
• Declare overseas bank accounts, investments, and properties

This is the category with the highest compliance requirements.

Conclusion:

Understanding your residential status for NRI in India is the key to planning your taxes correctly. Even though the rules may seem complicated at first, once you know the day limits and the RNOR conditions, the process becomes much clearer.

Need Help Determining Your NRI Status or Filing Taxes?

At KDP Accountants, our team helps NRIs with:

• Determining residential status
• Understanding RNOR eligibility
• Filing NRI income tax returns
• FEMA and DTAA guidance
• End-to-end Indian tax compliance

If you’d like support, reach out to us at enquire@kdpaccountants.com .