What is Residential Status in Income Tax?

Residential Status is a legal calculation used by the Income Tax Department to determine how much of a person's income can be taxed in India for a specific financial year.

It is entirely based on the number of days you physically stayed inside the borders of India during that financial year (1st April to 31st March).

Under the Indian Income Tax Act, an individual is classified into one of three statuses:

1. Resident and Ordinarily Resident (ROR):
   • You stayed in India for 182 days or more in the year.
   • Tax Impact: You must pay tax in India on your Global Income (money earned in India AND money earned in foreign countries).
2. Resident but Not Ordinarily Resident (RNOR):
   • A transition status for NRIs returning to India.
   • Tax Impact: You generally only pay tax on money earned in India.
3. Non-Resident Indian (NRI):
   • You stayed in India for less than 182 days.
   • Tax Impact: You only pay tax on the money you earn inside India (like rent from an Indian house). Your foreign salary is totally tax-free in India.