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An individual is said to be resident in India if he/she satisfies the following conditions:
- If he/she is in India for a period of 182 days or more during the previous year; or
- If he/she is in India for a period of 60 days or more during the previous year and 365 days or more during four years immediately preceding the previous year.
In the second bullet point, 60 days is replaced by 182 days in case of an Indian citizen or a person of Indian Origin coming on a visit to India or 182 days in case of an Indian citizen going abroad for employment during the previous year. Here, a person is considered to be of Indian Origin if he/she or either of his/her parents or any of the grandparents, was born in undivided India. A company is a resident in India if it is an Indian company or during the previous year, the control and management are situated wholly in India.
Following incomes are exempt from tax in the hands of an NRI:
- Dividends from shares of domestic companies
- Interest on NRE & FCNR(Foreign Currency Non- Repatriable) account
- Long term capital gains from listed equity shares and equity-oriented mutual funds
- Interest on government-issued savings certificates and notified bonds
A resident of India may qualify as either resident and ordinarily resident (ROR) or resident but not ordinarily resident (RNOR). If, in addition to satisfying both the conditions for a resident, the individual satisfies the below two conditions, he/she is considered as ROR:
- Resident in India (as per the basic conditions mentioned above) in any two out of 10 previous financial years preceding the previous year and
- Physical presence in India is 730 days or more in the seven previous financial years preceding the previous year
If even one of the above conditions is not satisfied, then he/she is considered as RNOR.