According to reports from Business Standard, residential status in India is determined by physical presence rather than citizenship. The Income Tax department uses the term residential status for tax calculation purposes only, with no commentary on a taxpayer's citizenship status. There are four distinct categories: resident, non-resident (NRI), resident but ordinarily resident (ROR), and resident but not ordinarily resident (RNOR).
As reported by Business Standard, a taxpayer qualifies as a resident of India if they meet one of two conditions: living in India for 182 days or more during the relevant financial year, or staying in India for 60 days or more during the financial year and 365 days or more during the previous four financial years combined. The 60-day threshold increases to 182 days for Indian citizens leaving for employment outside India, crew members of Indian ships, or individuals earning ₹15 lakh or more during the tax year. For those earning more than ₹15 lakh, the threshold becomes 120 days.
According to Business Standard, non-residents are taxed only on income earned or received in India, while ROR status subjects taxpayers to global income taxation. The ROR classification requires residency in two out of 10 tax years immediately preceding the relevant year, combined with 730 days or more in India over seven tax years. RNOR status applies to those who were non-resident in nine out of 10 previous years or stayed in India for 729 days or less in the last seven years.
As reported by Business Standard, ROR status subjects all income to taxation, including global income, while RNOR taxation covers only Indian income and certain foreign income linked to India. Non-residents face taxation only on income earned or received in India, with foreign income exempt if it has no connection to India. Foreign asset disclosure requirements vary by status: non-residents have no obligations, ROR must comply, and RNOR has no disclosure requirements.
According to recent reports, mutual fund taxation in India follows specific rules based on fund type and holding period. Equity-oriented funds (≥65% equity) are taxed at 20% for short-term gains (≤12 months) and 12.5% for long-term gains (>12 months). Debt funds purchased after April 1, 2023, are treated as short-term gains regardless of holding period under Section 50AA, while pre-April 2023 purchases qualify for long-term status after 24 months. ELSS funds offer tax benefits with mandatory 3-year lock-in and ₹1.25 lakh annual exemption for long-term capital gains. International funds and gold investments have different tax treatments based on structure and holding periods.
