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Understanding Taxes

The difference between Resident, Non-resident, and Not Ordinarily Resident

Tax assessees may be resident or non-resident. Residents are further subdivided into two sub-categories - (a) resident and ordinarily resident, and (b) resident but not ordinarily resident. To determine which category you fall into, apply the following tests to the tax year from April 1 to March 31.

Resident
A Resident is one who falls into either of these two categories:

  1. Is in India for 182 days in the year or more, OR
  2. In the preceding four years was in India for 365 days or more, and in the current tax year is in India for a total of 60 days or more

This applies to citizens of any nationality. However the period of 60 days in the second clause above will be extended to 182 days (for Indian citizens and foreign citizens of Indian origin) for those who fall into one of these two categories:

  1. an Indian citizen who left India in any year for employment outside India, OR
  2. an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India
Non-Resident
A tax assessee is non-resident if he or she is not a Resident as-per the section above.

Resident but Not Ordinarily Resident
A Resident is "not Ordinarily Resident" if he or she fulfils either of these two conditions:

  1. Has been a Non-Resident in India for 9 out of 10 preceding years, OR
  2. During the 7 preceding years been in India for a total of 729 days or less

Tax Liability on Indian Income and Foreign Income

  Resident & Ordinary Resident Resident & Not Ordinary Resident Non Resident
Indian Income      
Income received or deemed to be received in India during the current financial year Taxable Taxable Taxable
Income accruing for arising or deemed to accrue or arise in India during the current financial year Taxable Taxable Taxable
Income accruing or arising or deemed to accrue or arise outside India, but first receipt is in India during the current financial year Taxable Taxable Taxable
Foreign Income      
Income accruing or arising or deemed to accrue or arise outside India, but first receipt is outside India, during the current financial year Taxable Not taxable Not taxable
Income accruing or arising outside India from a Business / Profession controlled from India during the current financial year Taxable Taxable Not taxable
Income accruing or arising outside India from any source other than Business / Profession controlled from India Taxable Not taxable Not taxable
Published Jul 03 2008

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Comments

Comments

 

Jaanuable said:

really simple and useful

March 15, 2010 12:58 AM
 

shubh said:

easy tounderstand

October 3, 2010 10:12 AM
 

rajesh said:

detailed and easy wordings!!

October 26, 2010 8:55 AM
 

muthuraman.k.r said:

satisfied answer

October 30, 2010 3:10 AM
 

Arif mulla said:

realy simply & satisfied answer

January 1, 2011 7:12 AM
 

L.Mohan said:

I am working in saudi arabia since from november,2006. my income is taxable from india or excempt from tax.

June 6, 2011 2:31 AM
 

atul said:

Salary received by resident but ordinary resident is it taxable as normal salary or is there any different method

June 15, 2011 2:48 AM
 

Vivek Gupta said:

I am an NRI, Presently working in Saudi Arabia on “Resident Permit”since March 2008.

I wish to return to India in Dec-2011.

Details of my stay in India is as follows.

calendar Year                      Assesment Year             Stay In India (Days) ITR Filed

01-04-2007 to 31-03-2008 01-04-2008 to 31-03-2009 337                          Yes.

01-04-2008 to 31-03-2009 01-04-2009 to 31-03-2010 8                              No

01-04-2009 to 31-03-2010 01-04-2010 to 31-03-2011 32                            No

01-04-2010 to 31-03-2011 01-04-2011 to 31-03-2012 29                            No

01-04-2011 to 31-03-2012 01-04-2012 to 31-03-2013 Planning Approx

                                                                             110 days  

Kindly let me know what will be my status on returning to India in FY 2011-12.

Will it be NOR?

What will be my tax liability for calendar Yr 2011-12 ?Do i need to pay tax on amount i send through remittance in this financial year.

Please revert on vivekgupta.india@gmail.com

Thanking You.

June 16, 2011 12:59 PM
 

vivek Gupta said:

Dear Sir,

acording to IT act,section 6, for NRI, condition no:3

(3) An individual (whether Indian citizens or not) who is outside India and who comes on a visit to India in any previous year will be treated as "non-resident" in India if he stays in India in that previous year less than 182 days subject to the condition that during the preceding four previous years his stay in India does not amount to 365 days or more.

WITH THIS SEEMS YOUR INPUTS ARE NOT CORRECT.

Please advice.

vivek

June 19, 2011 12:35 PM
 

K.S.Amith Bhat said:

Dear Sir,

After working abroad in Gulf from Oct 2001  till Dec 2008,I came back to India for good in 2008 December.

All my Deposits were  NRE deposits maturing in 2010 October.So,I continued it as NRE deposits( No income tax on interest till maturity).

So,I had no other local income.( NRIs have an option to continue the deposits as NRE deposits till maturity...no IT on the interest amount)).

So,I did not file IT returns between 2008 Nov and 2010 March.

Now I have converted all my NRE deposits( about 0ne CRORE rupees) to DOMESTIC DEPOSITS in October 2010.I have to file the IT returns now before 31 July 2011.

Now I have lost my passport (passport period:- 2001 to 2011). My brief case containing my was stolen in a Bus in June 2011.( I had renewed my passport in April 2011). I hold a renewed new passport now. But previous passport( 2001 to 2011 is lost.

What shall I do now?

How to prove that I was a Non-Resident between 2001 and 2008?

I don't have even Xerox copies of all the pages of my lost passport

Kindly advice. I am left with only a few days to file my IT returns.

Regards,

Amith

July 15, 2011 5:54 PM

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