Did you know that your tax liability is determined based on your residential status? Learn more about how your stay in India affects your tax returns and more with the top chartered accountant firms in Gurgaon. We'll discuss residential status and its impact on taxability in India, and what you should do:
Clear your doubts and queries!
The residential status of an individual determines their tax liability in India under the Income Tax Act. Based on whether an individual is a resident of India or a non-resident Indian, their income will be taxed. A resident in India has to pay taxes for every type of income, while a non-resident only has to pay taxes on income earned within India. This is why it is important to understand your residential status.
Under the Income Tax Act, an individual’s residential status is determined based on their duration of stay or physical presence in India. An individual is considered a resident of India if they meet one of the following conditions: they have been physically present in India for at least 182 days during the current financial year, or if they are in India for at least 60 days during the current financial year and 365 days in the preceding four years. You can check other criteria in the sections above.
The residential status of an individual affects the taxability of an individual's income because it helps to determine whether the income source should be taxed or not based on their physical stay in India. A resident in India is taxed on income from any source, while a non-resident Indian is only liable to tax on income generated within India.
Yes, foreign income is taxable for residents in India. However, this is an exception to this rule. If you are an NRI, then your income is taxable only if the income's source is from India.
Yes, your residential status in India can change based on how long you stay within the country.
There are three types of residential status in India: (1) Resident and Ordinarily Resident, (2) Resident but Not Ordinarily Resident, and (3) Non-Resident Indian.
