Criteria to decide whether a person is resident varies from statute to statute. Every statute has its own definition of residents.
NRI as per Income Tax Act, 1961
Under Income Tax Act, Section 6-”Residence in India” read with section 2(30)-”Non-resident” defines criteria to decide residential status of a person.
As per Section 6, any person is considered as resident in India if he satisfies any of the following conditions:
- The concerned individual has been in India for more than 182 days during the relevant previous year; or
- The concerned person has stayed in India for 365 days or more for 4 years immediately preceding the relevant previous year and has stayed in India for 60 or days during the relevant year.
Amendments by Finance Act, 2020
However, with an objective to stringent provisions related to residential status, the Finance Act, 2020 has proposed to change the period of 182 days to 120 days. Therefore, concerned individuals must have stayed in India for more than 120 days during the relevant financial year to qualify as a resident.
As per Section 2(30) of Income Tax Act, any person who is not a resident in India is a non-resident.
It is pertinent to check the residential status of a person as it helps in determining the taxability of Income earned by such person in India. Read hear to know more about NRI
NRI as per Constitution of India
The Constitution of India doesn’t define or determine whether a person is a resident in India or not. However, Part-II of the Constitution of India determines the “Citizenship” of a person. It helps in checking whether a person is an Indian Citizen or not.
As per Article 5 of The Constitution of India, A Person who has his domicile in the territory of India and who satisfies any of the following condition shall be considered as Indian Citizen:
- Who was born in the territory of India or
- Either of his parents were born in the territory of India or
- who is ordinarily residing in the territory of India for not less than 5 years immediately preceding such commencement,
Other terms with vaguely the same meaning are overseas Indian and expatriate Indian
NRI as per Foreign Exchange Management Act
According to FEMA, you are NRI in following cases:-
- If you are settled abroad and have come to India for a purpose other than employment or business and have no intention to stay in India permanently, you will continue to be considered Resident Outside India (NRI) irrespective of your duration of stay in India.
- If you are a student studying abroad, then you are a NRI from the first day of leaving Indian grounds.
- If you go abroad for employment, business or vocation, you are NRI as per FEMA from day 1 of your departure.
However, the Income Tax Act determines whether a person is NRI or not depending upon the duration of stay whereas FEMA decides if you are NRI or not depending upon the reason on stay or departure.