Residential Status Under Income-tax Act, 1961

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Residential Status Under Income-tax Act, 1961 – N.D. Savla & Associates

For taxation purposes in India, determining residential status under the Income-tax Act, 1961 is the first and most critical step. An individual’s tax liability depends on whether they are treated as a Resident, Resident but Not Ordinarily Resident (RNOR), or Non-Resident Indian (NRI). At N.D. Savla & Associates, we provide expert advisory on calculating and interpreting residential status, ensuring correct tax compliance for both residents and NRIs.

Overview

PIOs and OCIs are often NRIs living abroad who maintain financial ties with India through property, investments, or family connections. While they enjoy certain privileges like simplified visa rules and property ownership rights, their tax liability in India is based on days of stay in India and income earned here. Correct determination of their status ensures that they do not face double taxation or compliance issues.

Features

  • Advisory on residential status determination for PIOs and OCIs

  • Clarification on whether global income is taxable in India or not

  • Tax filing support for PIOs/OCIs with Indian income (rental, capital gains, dividends)

  • Guidance on NRI, RNOR, and Resident classification for PIOs/OCIs

  • Compliance with FEMA rules for property ownership, investments, and repatriation

  • Assistance in applying DTAA benefits to reduce tax burden

Documents Required

  • Passport (Indian/foreign)

  • OCI/PIO card copy

  • PAN card

  • Proof of stay in India (entry/exit records)

  • Indian income documents (property rent, sale deed, dividend, interest)

  • Foreign income/tax return details (if claiming DTAA relief)

  • Bank account details (NRO/NRE/FCNR)

Procedure

  • Day Count Analysis – Review the number of days a PIO/OCI has stayed in India during the financial year and past years.

  • Status Classification – Categorize as Resident, RNOR, or Non-Resident under Indian law.

  • Scope of Income – Identify taxable income in India (salary, rent, capital gains, etc.).

  • Tax Filing – File ITR for Indian income and claim DTAA relief for foreign income, if eligible.

  • FEMA Compliance – Check FEMA rules for property ownership, remittances, and investments.

  • Ongoing Advisory – Review residential status annually to align with changing travel/stay patterns.

Why This Matters

PIOs and OCIs often assume they are exempt from Indian taxation, which is not true if they earn income in India or meet stay criteria. Incorrect classification may result in tax notices, double taxation, or FEMA violations. With N.D. Savla & Associates, your residential status as a PIO or OCI is assessed correctly, ensuring smooth compliance and optimal tax planning.