Residential Status under Income Tax Act

To define residential status in India, let us first understand the key factors that impact your residential status in the country. The different categories of residential status are based on an individual's connection with India and the time duration they have stayed in the country.

Residential status is not the same as citizenship status. It is purely implemented to assess the category of an individual and their income when it comes to fulfilling their tax obligations as per the Income Tax Act.

Moreover, it is important to note that the residential status for individuals will differ from the residential status of businesses, companies, etc.

Under the Income Tax Act, an individual's residential status is divided into 3 sub-categories: Resident and Ordinarily Resident, Resident but not Ordinarily Resident and Non-Resident. Here are the eligibility criteria for being a resident of India.

The individual has been in India for at least 182 days out of the 365 days within a financial year.

The individual has been in India for at least 60 days in the financial year and for at least 365 days in the last 4 years before the current financial year.

Let's look at the 3 subcategories below.

Resident and Ordinarily Resident (ROR)

• This is one of the most common categories of resident status in India. Any Indian citizen meeting the following criteria, in addition to the above-mentioned resident criteria, is called a resident and ordinarily resident.

• The individual has spent at least 730 days or more in India in the last 7 years before the current financial year.

• The individual has lived in India for at least 2 years out of the last 10 years before the current financial year.

Resident but Not Ordinarily Resident (RNOR)

• Another category of residential status for individuals is called resident but not ordinarily resident. There are 3 situations under which an individual can be termed an RNOR:

• Any individual who does not meet the ROR category.

• If a person is an Indian citizen or person of Indian (PIO) origin with a total income (not including foreign income) of more than Rs.15 lakhs and has lived in the country for less than 180 days but more or equal to 120 days during that previous year multiple benefits like cashless treat

• If an individual, by default, is deemed to be a resident of India.

Non-Resident (NRI)

• An individual who does not meet the criteria mentioned above for resident status but meets the following criteria is called a non-resident.

• The individual spends less than 181 days in India in one financial year.

• The individual stays in India for more than 60 days in one financial year but less than 365 days in the last four years before the current financial year.

Now that you understand the different categories of residential status in India under the Income Tax Act, you must also know other aspects of the Income Tax Act that can help with exemptions and deductions.

One such aspect is health insurance premiums. When you invest in [medical insurance plans](medical insurance plans), you can avail of a deduction of up to ₹25,000 for self, spouse, and children, and ₹50,000 for elderly parents on premiums paid under section 80D.

Moreover, when you invest in a medical insurance plan from Tata AIG, you can avail of multiple benefits like cashless treatments at any hospital in India, wide coverage, ample financial security, and much more.

If you are looking for adequate coverage at affordable rates, you can explore our 5 lakh health insurance plan and enjoy high peace of mind and financial security in times of medical emergencies.