India Tax Residency & RNOR Status

Quick reference

Quick reference categories (Quick reference)

Category	Tests	Taxed on
Resident and Ordinarily Resident (ROR)	See below	Worldwide income
Resident but Not Ordinarily Resident (RNOR)	See below	India-source + foreign income from India business/profession
Non-Resident (NR)	Neither test met	India-source income only

Step 1: Are you Resident or Non-Resident?

• Resident definition (tax year) — A person is resident in India for a tax year (1 April – 31 March) if they meet either Test A or Test B. (Income Tax Act, 1961, §6 (residence))
• Test A — Present in India for 182 days or more during the year days (Income Tax Act, 1961, §6 (residence))
• Test B — Present in India for 60 days or more during the year AND for 365 days or more in the preceding 4 years days (Income Tax Act, 1961, §6 (residence))
• High-income Indian citizens abroad (from FY 2020-21) — An Indian citizen whose income from Indian sources exceeds ₹15 lakhs ($18,000) and who is NOT liable to tax in any other country → deemed Indian resident even if not physically present for 182 days (Test B modified: 120-day threshold instead of 60-day). ₹15 lakhs / $18,000 (From FY 2020-21) (Income Tax Act, 1961, §6 (residence))
• Neither test met — If neither test is met → Non-Resident (Income Tax Act, 1961, §6 (residence))

Step 2: Ordinary Resident or RNOR?

• RNOR condition 1 — Has been a non-resident in India in 9 or more of the previous 10 years years (Income Tax Act, 1961, §6 (residence))
• RNOR condition 2 — Has been in India for a total of 729 days or less in the previous 7 years days (Income Tax Act, 1961, §6 (residence))
• Otherwise ROR — Otherwise → Resident and Ordinarily Resident (ROR). (Income Tax Act, 1961, §6 (residence))

RNOR: the key benefit

• RNOR taxable income scope — An RNOR is taxed only on: Income accruing/arising in India; Income received in India; Income from a business/profession controlled from or set up in India. (Income Tax Act, 1961, §5 (scope of total income))
• Foreign income not from India business — Foreign income that is NOT from an India business → not taxed in India for RNOR. (Income Tax Act, 1961, §5 (scope of total income))

This is important for returning NRIs: in the first 1–2 years after returning to India, they are often RNOR and their foreign-source investment income, foreign property rental, and foreign employment income are not taxable in India.

Capital gains under each status

Capital gains under each status (Income Tax Act, 1961, §5 (scope of total income))

Asset	ROR	RNOR	NR
Indian shares	Taxed	Taxed	Taxed
Foreign shares	Taxed	Not taxed (foreign income)	Not taxed
Indian property	Taxed	Taxed	Taxed
Foreign property	Taxed	Not taxed	Not taxed

India capital gains rates (brief)

• STCG on listed shares/equity funds (held < 1 year) — 20% (From FY 2024-25; was 15%) (Finance Act 2024 (revised STCG/LTCG rates))
• LTCG on listed shares/equity funds (held ≥ 1 year, above ₹1.25 lakh) — 12.5% (From FY 2024-25) (Finance Act 2024 (revised STCG/LTCG rates))
• STCG on other assets — taxed at slab rates (Finance Act 2024 (revised STCG/LTCG rates))
• LTCG on other assets (property, unlisted shares) — 20% with indexation (Finance Act 2024 (revised STCG/LTCG rates))

Sources

• Income Tax Act, 1961, §6 (residence), §5 (scope of total income)
• CBDT: incometax.gov.in
• Finance Act 2024 (revised STCG/LTCG rates)

Working paper only. The 120-day rule for high-income Indian citizens abroad is a relatively new provision and requires careful day-count analysis. Have a qualified Indian chartered accountant (CA) review before making residency-dependent decisions.