1. Definitions & Exceptions:

FEMA: FEMA has 2 classifications:

1. Person Resident In India
2. Person Resident outside India (NRI)

NRI means a person resident outside India who is a citizen of India or a person of Indian Origin (PIO).

Person Resident In India: A person residing in India for more than 182 days during the course of preceding financial year. The above definition does not apply if a person has gone outside India (or stayed outside India) for:

1. taking up employment; or
2. carrying out a business; or

any purpose that indicates your intention to stay abroad for an uncertain period.

Thus, FEMA considers the intention along with the duration of the stay. If a person and stayed in India for more than 182 days but has an intention to stay outside India for an uncertain period then he will be considered as a person Resident outside India (NRI).

On Similar lines, if a person has stayed in India for less than 182 days during the course of preceding financial year, he is an NRI. This too has the following exceptions.

The above definition does not apply if a person has come to India (Or stayed in India) for:

1. taking up employment; or
2. carrying out a business; or

any purpose that indicates your intention to stay in India for an uncertain period

Thus, if a person leaves India for employment, he will be considered as an NRI from the day he leaves the country. Income Tax: As per Section 6 of the Act, there are 3 residential statuses:

1. Resident and Ordinary Resident
2. Resident and Not Ordinarily Resident
3. Non Resident India (NRI)

An Individual is a Resident if he satisfied any of the two basic conditions:

1. Stays in India for 182 days or more; or
2. Stays in India for (a) 60 days or more in the previous year and (b) 365 days or more in 4 years preceding that previous year

Condition 2 will ensure that most of those who are going abroad for the first time will not be eligible for NRI status.

Exceptions to the iind basic condition:

1. An Individual who is a citizen of India, leaves India as a member of crew of an Indian Ship or for the purpose of employment outside India.
2. An Individual of Indian Origin comes to India on a visit in the previous year

In both the above cases, “60 days” in the iind basic condition will be read as “182 days”

Not Ordinarily Resident: Any Individual who satisfies one of the two basic conditions and satisfies one of the Additional conditions is a Resident but Not Ordinarily Resident:

1. An individual has been an NRI in 9/10 previous years preceding that year; or
2. Has been in India for less than 729 days in 7 preceding previous years preceding that year; or

• *An individual is an Indian Citizen and is not a tax-resident in any other country and his Indian Income is more than Rs. 15 lacs, who has been in India for 120 days or more but less than 182 days

1. *Deemed to be a resident in India (i.e. an individual is an Indian Citizen and is not a tax-resident in any other country and his Indian Income is more than Rs. 15 lacs).

* Applicable from FY 2021 Non-Resident Indian: Any individual who does not satisfy any of the two basic conditions is a NRI.

Stay in India need not be continuous in any of the above cases. Aggregate no. of days spent in a year has to be considered.

2. Difference:

	FEMA	Income Tax
Min stay in India	More than 182 days	182 days or More
Year under consideration for determining residential status	Previous Financial Year	Current Financial Year
Intention to Stay	Considered	Not Considered
More than one residential status	Possible	Not Possible

3. Illustrations

Illustration 1

You leave India on November 15, 2015 to visit your brother in the US. You return to India on August 20, 2017. Income Tax Act

1. FY2016: You are Resident since you have stayed in India for more than 182 days during FY2016.
2. FY2017: You are NRIas you have been outside India for the entire year.
3. FY2018: Resident since your stay in India will be more than 182 days.

FEMA FY2016: You are Resident since you were in India for 365 days during FY2015 (preceding financial year)

1. FY2017: You are Residentsince you were in India for more than 182 days during FY2016 (preceding financial year)
2. FY2018: You are Resident since you have returned to India permanently (even though your stay abroad was more than 182 days during FY2017)

Illustration 2

You leave India for employment on November 15, 2015. Income Tax Act: Since you are in India for more than 182 days, you will be considered Resident in FY2016. Your foreign income will also be taxed in India. FEMA: Since you are going abroad for employment, you will be considered NRI from day 1 of your departure. You will be Resident until November 14, 2015 and non-resident thereafter.

Illustration 3

You have been abroad for many years. You return permanently to India on Feb 15, 2016. Income Tax Act: You are NRI for FY2016 since you were abroad for over 300 days in FY2016. Your foreign income won’t be taxed in India. For FY2017, you will still be resident. However, the decision between RNOR and ROR status will be based upon the period of stay abroad. FEMA: You are NRI till Feb 15, 2016. Since you have returned permanently, you are resident after Feb 15, 2016. For FY2017 too, you will be considered resident.