What are the conditions to become a non-resident for income tax purpose?

2017-18 14

2018-19 128

2019-20 115

2020-21 Nil

Sub-total: 257 days

2021-22 135 (by March 15, 2022)

One of the provisions of the Income Tax Act stipulates that in order to maintain status as a non-resident, your stay in India should not exceed 365 days in the 4 years preceding the previous year. But in the four years 2018-19, 2019-20,2020-21 and the current year 2021-22 my son’s stay in India is already 378 days, how will it affect his residential status in the financial year 2022-23 ? Can he stay in India in the current year 2021-22 in March 2022-23 till March 31, 2022 without affecting his status as non-resident? To ensure that he remains a non-resident for the next year (2022-23), his stay in India for the year 2022-2023 should be restricted for how many days?

There are two basic conditions based on physical stay in India to determine whether you are a resident or not. If you fulfill any of the conditions, you become a non-resident. The first condition stipulates a physical stay in India of less than 182 days during the relevant year. The second condition determines your physical stay in India during the four years preceding the relevant financial year Less than 365 and less than 60 days during the relevant financial year. So if a person fulfills either of the two conditions, he becomes a non-resident for tax purposes. Please note that the terms of physical stay in the second position are cumulative for 365 days in the four years preceding the financial year and 60 days during the respective financial year.

So let us first examine the first condition for your son. Since his physical stay in India is going to be less than 182 days even if he stays here till 31st March 2022, he remains a non-resident for the current financial year. Now let’s see if your son will remain an immigrant next year also. Under the first condition, he shall become a non-resident in the next year if he resides in India for 182 days or more during the next year. However, his total physical stay during the four years preceding the year 2022-2023 (1918-19 to 2021-22) has already crossed 365 days if he stays in India for 60 days or more in the financial year 2022. If he lives in, he will become a resident. -2023 under the second condition. So your son has to make sure to stay in India for less than 60 days next year to remain non-resident next year also.

Balwant Jain is a tax and investment specialist and can be contacted on Twitter at jainbalwant@gmail.com and @jainbalwant.