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Microlesson · 5-min read

Residential Status – Decision Framework

# Residential Status — Master Framework

Residential status determines the scope of Total Income taxable in India. The test differs by type of person.

## Step 1 — Determine Resident or Non-Resident

### A. Individual — Sec 6(1)

2 Basic Conditions (Resident if ANY ONE satisfied):

1. Stay in India ≥ 182 days in the Previous Year, OR

2. Stay in India ≥ 60 days in PY AND365 days in 4 PYs preceding PY.

2 Additional Conditions (must satisfy BOTH to be ROR):

1. Resident in India in 2 out of 10 preceding PYs, AND

2. Stay in India ≥ 730 days in 7 preceding PYs.

```

Both Basic Conditions Fail → Non-Resident (NR)

At least 1 Basic Condition met → Resident

├── Both Additional Conditions met → Resident & Ordinarily Resident (ROR)

└── Even one Additional Condition fails → Resident but Not Ordinarily Resident (RNOR)

```

### B. Firm / HUF / AOP / BOI / AJP — Sec 6(2)/6(4)

Decision rests on Control & Management of Affairs:

Control & ManagementStatus
Even partially situated in India (Thoda bhi India mein)Resident
Wholly situated outside India (Pura India ke bahar)Non-Resident

### C. Company — Sec 6(3)

TypeStatus Rule
Indian CompanyAlways Resident
Foreign CompanyResident if POEM (Place of Effective Management) is in India; else NR

## Step 2 — Scope of Total Income (Sec 5)

IncomeRORRNORNR
Received / Deemed to be received in India
Accrues / Arises / Deemed to accrue in India
Accrues / Arises outside India from a business controlled from India OR profession set up in India
Any other foreign income

Worked example

### Example 1

Example — Individual: Mr. R, an Indian citizen, was in India for 200 days in PY 2024-25. He was in India in 3 out of 10 preceding PYs (each with 250 days). Test: Basic Condition (i) — 200 ≥ 182 ✓ → Resident. Additional Conditions: (a) Resident in 2/10 preceding years ✓, (b) Stay 730/7 PYs — 3×250 = 750 ≥ 730 ✓ → ROR.

### Example 2

Example — Company: ABC Inc. is incorporated in the USA but its Board meets and key commercial decisions are taken in Mumbai. Test: POEM is in India → Resident in India (Foreign Company can become Resident only via POEM).

### Example 3

Example — Firm: XYZ & Co. (Partnership) has its head office in Singapore but one partner manages operations partly from Delhi. Test: Control & Management is partly in India → Resident in India.

⚠️ Common exam mistakes

  • Treating an Indian Company as possibly Non-Resident — it is ALWAYS Resident.
  • For HUF/Firm: applying the 182-day test (that is only for individuals).
  • Applying POEM test to Indian companies — it is only for foreign companies.
  • Requiring BOTH Basic Conditions for individuals — only ONE is sufficient.
  • Confusing 'wholly outside India' (Firm rule) with 'wholly in India' for the control & management test.
  • Forgetting the special 60+365 condition has carve-outs for Indian citizens leaving for employment / on Indian-flagged ship / visiting NRIs.
Bare-Act text Section 6(1), 6(6) · Income-tax Act, 1961 · click to expand
Section 6(1): An individual is said to be resident in India in any previous year, if he— (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.
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