As Per Section 6 of Income Tax Act, 1961, an individual is said to be the resident in relevant year, if he/she is in India:-

a) For 182 days or more in relevant year or

b) For 60 days or more in relevant year and for 365 days or more in 4 years immediately preceding relevant year.

So, if above condition is not satisfied you may be thought of a NON-RESIDENT INDIAN. In case you are an Indian Citizen, and you leave India for employment outside of India or as a member of the crew on an Indian ship, 60 days minimum period will be increased to 182 days. In case of a citizen of India and a member of the crew of a ship, the period or periods of stay in India shall, in respect of an eligible voyage shall be computed as follows:

a) The numbers of days of stay in India for such person shall not include the days – from the start date of the Continuous Discharge Certificate and ending on the end date of this document, as signed off on the Discharge certificate.

b) Continuous Discharge Certificate must be as per the Merchant Shipping (Continuous Discharge Certificate-cum-seafarer’s Identity Document) Rules, 2001 made under the merchant shipping act, 1958

c) This Continuous Discharge Certificate must be for a voyage, which originates from any port in India and has its destination at any port outside India OR which originates from any port outside India and has its destination at any port in India. [Notification No. 70/2015/ F.No.142 /12/2015-TPL].

The rule is applicable for finding out residential status of Indian citizens as crew on Indian ships starting from the financial year 2015-16. Such crew is considered as Non Resident Indian (NRI) for income tax purposes, when they have spent less than 182 days in India. While calculating this stay of 182 days, the entire period mentioned in the Continuous Discharge Document shall be excluded even though the ship may have been on Indian coastal waters in its journey. Earlier, the number of days outside India were only calculated from the date the Indian ship left Indian coastal waters. Besides Resident & Non Resident Indian there is a third category – That of a Resident but Not Ordinarily Resident- after having spent many years abroad if you have recently moved back to India, you may fall in the category of Resident but not Ordinarily Resident (RNOR).

If you are a NON RESIDENT INDIAN, Taxable income will be –

a) Resident and Ordinary Resident (ROR) An individual may become a resident and ordinarily resident in India if he satisfies both the following conditions given u/s 6(1) besides satisfying any one of the above- mentioned conditions:

i. he is a resident in at least any two out of the ten previous years immediately preceding the relevant previous year, and

ii. he has been in India for 730 days or more during the seven previous years immediately preceding the relevant previous year.

b) Resident but Not Ordinary Resident (RNOR) satisfies basic but not the additional conditions described under section 6(1).

If you’re a RESIDENT however NOT ORDINARILY RESIDENT (RNOR) apparently, just in case you’ve got simply came back to India, you’re allowed to stay your RNOR standing for up to three monetary years post you come back to India. That might profit you an exceedingly in a very huge approach thus financial gain that you simply might earn outside of India while can have come back will still be not taxed in India. Therefore–

•  Any income that is ‘earned’ in India is taxable for you in India
•  Your income outside of India is not taxable in India

And you can continue this status for a period of 3 years. However, once you have attained the status of a Resident, all of your income within and outside India will be taxable in India, barring any concessions that may be available under the Double Taxation Avoidance Agreement between India and the country from where your overseas income has arisen.

Term “Earned” in India means, any income received in India or the law deems it to be received in India by you or on your behalf, any income that accrues or arises in India or income that the law believes accrues or arises in India.

‘Accrues in India’ as per Section 9 of the Income Tax Act (note that this applies to everyone while considering the income that accrues or arises to them irrespective of what their residential status is).

•  Income from a business connection in India.
•  Income from any property, asset or source of income in India.
•  Capital gain on the transfer of a capital asset situated in India.
•  Income from salary if the services are rendered in India.
•  Income from salary which is payable to you by the Government of India for services rendered outside of India when you are an Indian citizen.
•  Dividend paid by an Indian company even though this may have been paid outside India.
•  Interest, royalty, or technical fees received from the Central or the State Government or from specified persons in certain circumstances.

Tax laws are an extensive field affecting individuals, small businesses as well as large corporate houses. The complexities involved in this area makes it essential to have sound advice from professionals.