Direct and Indirect Taxation · Basic Concepts, Basis of Charge and Capital and Revenue Receipts

Residential Status of Assessees: Tests and Rules

Updated 10 October 2026 · Fact-checked

Residential status decides which of your income India can tax. For an individual, count days in India in the tax year and in the four preceding years. For a HUF, firm or other person, check where control and management lie. A company is resident if Indian, or if its place of effective management is in India. Then decide ROR or RNOR.

Understand Residential Status of Assessees

Residential status is a label you give an assessee for one tax year. It is not about citizenship. A foreign citizen can be resident in India, and an Indian citizen can be non-resident. The label can change every year, so you must test each tax year separately.

The label matters because it sets the scope of total income. A resident and ordinarily resident (ROR) is taxed on income from anywhere in the world. A resident but not ordinarily resident (RNOR) and a non-resident (NR) are taxed mainly on income that is received in India, or accrues or arises in India, or is deemed to do so. An RNOR is also taxed on foreign income from a business controlled in India or a profession set up in India.

The tests differ by type of assessee. An individual is tested on physical stay in India. A HUF, firm, AOP, BOI and any other non-company person is tested on where control and management of its affairs sit. A company is tested on whether it is Indian, and if foreign, on its place of effective management.

The ROR/RNOR split applies only to individuals and HUFs. Firms, AOPs, BOIs, companies and other persons are either resident or non-resident. There is no RNOR for them.

The Income-tax Act, 2025 uses the term tax year (for example, tax year 2026-27) instead of previous year and assessment year. Use that term in your answers. The tests below are applied to the tax year under test.

Key rules to remember

Individual: basic conditions for residence: Resident if (A) stay in India in the tax year ≥ 182 days, OR (B) stay in the tax year ≥ 60 days AND stay in the 4 preceding tax years ≥ 365 days; Satisfy either one to be resident. If neither is met, the individual is non-resident. Both the day of arrival and the day of departure count as days in India.
Exception: citizen or person of Indian origin (PIO) leaving India for employment abroad, or as crew of an Indian ship: In condition (B), 60 days is replaced by 182 days; Condition (A) of 182 days still applies. So such a person becomes resident only by staying 182 days or more in the tax year.
Exception: citizen or PIO visiting India: In condition (B), 60 days is replaced by 182 days if Indian-source income ≤ ₹15 lakh. If Indian-source income > ₹15 lakh, 60 days is replaced by 120 days (with 365 days in the 4 preceding years).; Indian-source income means total income excluding income from foreign sources. A visiting citizen or PIO with Indian-source income above ₹15 lakh who is resident only through the 120-181 day route is RNOR, by the express provision for that case.
Deemed resident individual: Indian citizen who is not otherwise resident (neither condition A nor condition B is met), Indian-source total income > ₹15 lakh, and not liable to tax in any other country by reason of domicile or residence → deemed resident; The deemed-resident rule applies only to a citizen who is not already resident under the basic conditions. A deemed resident is RNOR, by the express provision for deemed residents.
ROR test for individual or HUF manager: ROR if resident in at least 2 of the 10 preceding tax years AND stay in the 7 preceding tax years ≥ 730 days. Otherwise RNOR.; Both conditions must be met for ROR. Failing either one makes the assessee RNOR.
HUF, firm, AOP, BOI, other persons (not company): Resident unless control and management of affairs is wholly outside India during the tax year; If even part of the control and management is in India, the person is resident. For a HUF, ROR or RNOR depends on the status of its manager (karta) under the ROR test.
Company: Indian company → always resident. Foreign company → resident only if place of effective management (POEM) in the tax year is in India; POEM is the place where key management and commercial decisions needed for the conduct of the business as a whole are, in substance, made.
Scope of income by status: ROR: Indian + foreign income. RNOR and NR: income received, accruing, arising or deemed to accrue or arise in India; An RNOR is also taxed on foreign income from a business controlled in India or a profession set up in India.

How to solve Residential Status of Assessees questions

Use the same sequence for any question on residential status. It keeps you from mixing up the tests for different assessees.

1Identify the assessee: individual, HUF, firm, AOP/BOI, company or other person. Note the tax year asked for.
2For a company: if it is an Indian company, it is resident. If it is foreign, find where key management and commercial decisions are made. If that place is in India, it is resident. Otherwise non-resident. Stop here.
3For a firm, AOP, BOI or other non-company person: check whether control and management is wholly outside India. If yes, non-resident. If any part is in India, resident.
4For an individual: list days in India in the tax year and in the 4 preceding years. Check whether the person is an Indian citizen or PIO who left India for employment abroad or as crew of an Indian ship, or who is visiting India. For a visitor, note whether Indian-source income is above ₹15 lakh.
5Apply condition (A) of 182 days. Then apply condition (B). Use 60 days normally. For a citizen or PIO who left for employment abroad or as Indian-ship crew, use 182 days. For a visiting citizen or PIO, use 182 days if Indian-source income is ₹15 lakh or less, and 120 days if it is above ₹15 lakh. If neither condition is satisfied, check the deemed-resident rule for an Indian citizen with Indian-source income above ₹15 lakh who is not taxable in any other country. If that also fails, write non-resident.
6For a resident individual or HUF (through its manager): apply the ROR test of 2 of 10 preceding years and 730 days in 7 preceding years. If both are met, ROR. If not, RNOR. Separately, a deemed resident is RNOR under its own provision, and a visiting citizen or PIO who became resident through the 120-day route is RNOR under its own provision.
7State the status clearly with the working. Then link it to the scope of income, if the question asks which income is taxable.

Quickest way: Three-gate method for individuals

When to use it: Use this for MCQs and for the first half of a written answer on an individual.

Gate 1: 182 days or more in the tax year? If yes, resident. Go to the ROR test.
Gate 2: If not, check the person's type. If a citizen or PIO who left for employment abroad or as Indian-ship crew, the threshold in condition (B) is 182 days, so the person is not resident. If a citizen or PIO who is visiting India, the threshold is 182 days when Indian-source income is ₹15 lakh or less, and 120 days (with 365 days in the 4 preceding years) when it is above ₹15 lakh. Anyone else: check 60 days in the tax year and 365 days in the 4 preceding years. If still not resident, check whether an Indian citizen with Indian-source income above ₹15 lakh and no tax liability elsewhere is deemed resident.
Gate 3: For anyone who is resident, ask two quick questions: resident in 2 of the last 10 years, and 730 days in the last 7 years? Two yes answers give ROR. Any no gives RNOR. A deemed resident and a 120-day visiting citizen or PIO are RNOR by their own provisions.
For a company, only ask: Indian, or is POEM in India? For others, only ask: is control and management wholly abroad?

Common mistakes in Residential Status of Assessees

Using 60 days for an Indian citizen who left India for employment abroad or who is visiting India.
Students memorise 182 and 60 days and forget that the exception replaces 60 with 182 for employment abroad or Indian-ship crew, and for visitors with Indian income up to ₹15 lakh. For visitors with Indian income above ₹15 lakh it is replaced by 120.
Fix: Read the question for citizenship or Indian origin, the purpose of stay or departure, and Indian-source income before choosing the threshold.
Deciding status by citizenship or domicile.
Everyday meaning of resident gets mixed up with the tax meaning.
Fix: Remember that for tax purposes an individual is tested only on days of stay. Citizenship matters only for the exceptions and the deemed-resident rule.
Applying ROR/RNOR to a firm or a company.
Students treat the ROR test as universal.
Fix: Use ROR/RNOR only for individuals and HUFs. Firms, AOPs, BOIs and companies are only resident or non-resident.
Counting the wrong preceding years, for example 5 years instead of 4 for the 365-day test, or 10 years for the 730-day test.
Three different look-back periods (4, 7 and 10 years) are easy to mix up.
Fix: Write 4 / 7 / 10 beside the three tests before you start: 365 days in 4 years, 730 days in 7 years, 2-of-10 years for residence.
Saying a foreign company is resident because it has an Indian branch or Indian shareholders.
Students link residence to presence of business in India.
Fix: A foreign company is resident only if its place of effective management is in India in that tax year. Branch or shareholding alone does not decide it.
Treating the ROR test as satisfied when only one of its two conditions is met.
The word 'and' between the two conditions is overlooked.
Fix: Both conditions must be met for ROR. If one fails, write RNOR and show which condition failed.

Worked examples

Example 1

Mr. Arvind Nair, an Indian citizen, works in Dubai. In tax year 2026-27 he visits India and stays 100 days. His stay in the 4 preceding tax years totals 400 days. His Indian-source income in 2026-27 is ₹12,00,000. Determine his residential status for tax year 2026-27.

Show the solution

Condition (A): days in India in 2026-27 = 100, which is less than 182. Not satisfied.
Condition (B): Mr. Nair is an Indian citizen visiting India. His Indian-source income of ₹12,00,000 is not above ₹15 lakh, so 60 days is replaced by 182 days. Days in 2026-27 = 100, which is less than 182. Not satisfied, even though the 4-year stay of 400 days is above 365.
The 120-day threshold applies only where Indian-source income exceeds ₹15 lakh. His income is below that, so it does not apply. In any case, 100 days is below 120.
The deemed-resident rule needs Indian-source income above ₹15 lakh. His income is ₹12,00,000, so it does not apply.
Neither condition is met.

Answer: Mr. Arvind Nair is a non-resident for tax year 2026-27.

Example 2

Mr. David Fernandes, a Canadian citizen with no Indian origin, stays in India for 70 days in tax year 2026-27 and 400 days in the 4 preceding tax years. He was resident in India in 3 of the 10 preceding tax years and stayed 600 days in India in the 7 preceding tax years. Determine his residential status for tax year 2026-27.

Show the solution

Condition (A): 70 days is less than 182. Not satisfied.
Condition (B): he is not a citizen of India or a PIO, so no exception applies and the 60-day threshold stays. Days in 2026-27 = 70, which is at least 60. Days in the 4 preceding years = 400, which is at least 365. Condition (B) is satisfied, so he is resident.
ROR test, part 1: resident in 3 of the 10 preceding years, which is at least 2. Satisfied.
ROR test, part 2: stay in the 7 preceding years = 600 days, which is less than 730. Not satisfied.
Both parts must be met for ROR. Part 2 fails, so he is not ordinarily resident.

Answer: Mr. David Fernandes is resident but not ordinarily resident (RNOR) for tax year 2026-27. His foreign income is not taxable in India unless it is from a business controlled in India or a profession set up in India.

Exam tips

In MCQs, read for the traps first: citizenship or Indian origin, purpose of stay (employment abroad or visit), and whether Indian income is above ₹15 lakh. These decide which threshold applies.
In written answers, show each test as a line with the numbers and a conclusion such as 'satisfied' or 'not satisfied'. Step marks go to the working, not just the final label.
Always end by stating the status and, if asked, the scope of income. Do not leave it at 'resident'. Say ROR or RNOR for individuals and HUFs.
For company questions, quote the POEM idea in your own words: where key management and commercial decisions for the business as a whole are in substance made. Then apply it to the facts given.
Use the term tax year, not previous year or assessment year, and state the tax year the question refers to.

Practice questions from Basic Concepts, Basis of Charge and Capital and Revenue Receipts

Residential Status of Assessees in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Residential Status of Assessees: frequently asked questions

What is the difference between ROR and RNOR?

Both are resident in India. A ROR is taxed on global income. An RNOR is taxed mainly on income received in India or accruing, arising or deemed to accrue or arise in India, plus foreign income from a business controlled in India or a profession set up in India. A person is ROR only if resident in at least 2 of the 10 preceding tax years and in India for 730 days or more in the 7 preceding tax years.

How is the residential status of a company determined?

An Indian company is always resident in India. A foreign company is resident only if its place of effective management is in India during the tax year. A company can only be resident or non-resident, never RNOR.

Does the day of arrival and departure count as a day in India?

Yes. Both the day of arrival and the day of departure are counted as days of stay in India. This can change the result when the total is close to the threshold.

Can the residential status of a person change every year?

Yes. Residential status is decided separately for each tax year, based on the facts of that year and the preceding years. The same person can be non-resident in one year and resident in the next.

How is the residential status of a HUF decided?

A HUF is resident unless its affairs are controlled and managed wholly from outside India. If it is resident, it is ROR only if its manager (karta) meets both ROR conditions: resident in at least 2 of the 10 preceding tax years and 730 days or more in India in the 7 preceding tax years. Otherwise it is RNOR.