Private Client & NRI Advisory
NRI Residential Status
Two different tests — one under the Income-tax Act, one under FEMA — and they do not always agree. Getting both right is what decides your tax, your accounts and your investments.
Residential status is the hinge every other NRI question swings on, and India tests it twice. The Income-tax Act counts days: broadly, presence of 182 days or more in a financial year makes you resident, with a second test at 60 days combined with 365 days over the preceding four years, and a deemed-resident rule for high-income Indian citizens who are not taxed elsewhere. FEMA asks a different question altogether — not days, but intention: a person who leaves India for employment, business or an uncertain period becomes a person resident outside India from the day they leave.
The two answers can legitimately differ in the same year, and each drives different consequences: income-tax status decides what India taxes and whether the RNOR cushion applies; FEMA status decides which bank accounts you may hold, what you can invest in and on what terms. We determine both, document both, and plan travel and transactions around them.
What this covers
- Day-count determination under Section 6, including the RNOR years after a return to India
- The deemed-resident rule for Indian citizens with Indian income above ₹15 lakh who are not liable to tax abroad
- FEMA residential status on departure, return, and changes of intention in between
- Consequences map: bank accounts (NRE/NRO/FCNR), investments, property holdings under each status
- Status planning before a move — the year of departure and the year of return handled deliberately
- Documentation: a status file that stands up if a bank, buyer or assessing officer questions it
How the engagement runs
01
Travel record
Passport entries and travel history are assembled into a day-count for each relevant year.
02
Both tests applied
Income-tax status and FEMA status are determined separately, in writing, with the provisions relied on.
03
Consequences settled
Accounts, investments and pending transactions are aligned to the status — redesignation of accounts, reporting, corrections.
04
Forward plan
For clients in transition years, the travel and transaction calendar is set so the intended status is the one the record shows.
Questions clients ask
Can I be resident under FEMA but non-resident for income tax in the same year?
Yes. FEMA turns on intention and can change the day you leave India for a job abroad; income tax counts days in the financial year. A person who leaves in October is usually FEMA non-resident immediately, yet may still be tax-resident for that year. Both positions are lawful — they simply govern different things.
What is RNOR and why does it matter when I return?
Resident but Not Ordinarily Resident is the transitional income-tax status most returning Indians hold for two to three years. In RNOR years, foreign income that neither accrues nor is received in India stays outside Indian tax — which makes the timing of returning, and of realising foreign gains, worth planning rather than leaving to chance.
My bank asked me to redesignate my accounts. Is that connected?
Directly. A resident savings account may not be held by a FEMA non-resident; on becoming non-resident, accounts must be redesignated to NRO and new money routed through NRE/FCNR as applicable. Banks police this because FEMA requires it — we handle the redesignation and the reporting that follows from it.
Discuss Your Requirements With CorpCFO
Share the matter in confidence. You will hear back from the practice — not a call centre — with a clear view of the options and the next step.