# Residential Status under FEMA — Sections 2(v) and 2(w)
Residential status is the single most important concept under FEMA. Almost every provision asks whether a person is a 'person resident in India' or 'person resident outside India'.
## Person Resident in India — Section 2(v)
A person is resident in India if any of the following apply:
### (i) Individual — The 182-day test (with exclusions)
A person residing in India for more than 182 days during the course of the preceding financial year.
But does NOT include:
(A) A person who has gone out of India or stays outside India, in either case —
- For or on taking up employment outside India, or
- For carrying on outside India a business or vocation, or
- For any other purpose, in such circumstances as would indicate intention to stay outside India for an uncertain period.
(B) A person who has come to or stays in India, in either case, otherwise than —
- For or on taking up employment in India, or
- For carrying on in India a business or vocation, or
- For any other purpose, in such circumstances as would indicate intention to stay in India for an uncertain period.
### Other limbs of 'person resident in India'
(ii) Any person or body corporate registered or incorporated in India.
(iii) An office, branch or agency in India owned or controlled by a person resident outside India.
(iv) An office, branch or agency outside India owned or controlled by a person resident in India.
## Person Resident Outside India — Section 2(w)
Means a person who is not resident in India. (Residual/negative definition.)
## The two-step logic
```
Step 1: Was the person physically in India for > 182 days in the PRECEDING financial year?
If NO → not resident.
Step 2: If YES, check the exceptions in (A) and (B):
(A) Has the person left/stayed abroad for employment, business or with intention to stay abroad indefinitely?
→ Non-resident, despite the 182 days.
(B) Has the person come/stayed in India otherwise than for employment, business or with intention to stay in India indefinitely?
→ Non-resident, despite the 182 days.
Step 3: If still passing — resident.
```
## FEMA vs Income-tax Act — important contrast
| Feature | Income-tax Act, 1961 | FEMA, 1999 |
|---|---|---|
| Test period | Previous year (current FY) | Preceding financial year |
| Days threshold | 182 days (and 60+365 secondary test) | 182 days |
| Intention | Not relevant | Crucial — purpose of leaving/staying determines status |
This distinction is heavily tested in CA Inter examinations. Income tax looks at current year; FEMA looks at preceding year and at intention.
## Companies and bodies corporate
A company incorporated in India is always resident in India under FEMA, irrespective of where its directors live or where it operates. This is a settled rule and a frequent MCQ.
## Branches and offices
- Indian branch of a foreign company → resident in India (s.2(v)(iii)).
- Foreign branch of an Indian company → resident in India (s.2(v)(iv)).
Note that both are resident in India — the law follows the principal entity's effective control, not geography. This is precisely why FEMA can reach overseas branches.
## Summary chart
| Person | Resident? |
|---|---|
| Individual in India > 182 days in preceding FY, no intention to leave | Resident |
| Indian who left India for employment abroad | Non-resident (even if > 182 days in preceding FY) |
| Foreigner who came to India for employment | Resident (subject to the 182-day count) |
| Indian company | Resident (always) |
| US company's Mumbai branch | Resident in India |
| Indian company's London branch | Resident in India |
| US company (incorporated in US) | Non-resident |