Residential Status under FEMA

# Residential Status under FEMA, 1999

Sections 2(u), 2(v), 2(w)

Under FEMA, residential status is not for a financial year (unlike Income Tax) — it is determined from a particular date based on the purpose and duration of stay.

## Who is a "Person" under FEMA?

Person includes:

• Individual
• Hindu Undivided Family (HUF)
• Company
• Firm
• Association of Persons (AOP)
• Artificial juridical persons
• Agencies, offices & branches controlled by such persons

## Person Resident in India (PRII)

The basic rule has one quantitative test followed by two purpose-based exceptions.

### Basic Rule

A person who resided in India for more than 182 days during the preceding financial year.

### Exception — Two Cases Where the 182-Day Test is Overridden

Case A — Going Abroad → Becomes PROI from the date of departure

A person is NOT PRII (even if he stayed > 182 days last FY) if he goes outside India for:

• Employment, business or vocation, OR
• Any purpose indicating intention to stay for an uncertain period.

Case B — Coming to India → Becomes PRII from the date of arrival

A person IS PRII (even if he stayed ≤ 182 days last FY) if he comes to India for:

• Employment, business or vocation, OR
• Any purpose indicating intention to stay for an uncertain period.

### Special Note on Students

Students going abroad for studies are treated as PROI, because they usually take up work abroad to fund their stay/studies.

### Persons Other than Individuals

Also PRII:

• An office, branch or agency in India owned/controlled by a PROI.
• An office, branch or agency outside India owned/controlled by a PRII.
• Any other person registered or incorporated in India.

## Person Resident Outside India (PROI)

Any person who is not a PRII.

## Key Differences from Income Tax

> Citizenship is NOT a criterion under FEMA. An Indian citizen can be PROI; a foreigner can be PRII.