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What is the difference between resident and ordinarily resident (ROR) and resident but not ordinarily resident (RNOR) for tax purposes in India?

—Name withheld on request

Under the India income-tax law, there are three types of residential status: ROR, RNOR and non-resident.

Residential status is determined on the basis of physical presence of an individual in India during a financial year (FY) (including work days and non-work days) and the preceding 10 FYs. Residential status is dynamic and needs fresh determination for each FY.

An individual qualifying as ROR is taxable on his worldwide income in India and is required to report all foreign assets in the Indian income tax return (ITR). Also, the income earned from such foreign assets during the relevant FY along with the nature of income and head of income under which such income has been offered to tax in the India ITR needs to be reported in relation to each foreign asset.

The foreign assets to be reported include foreign bank accounts, financial interests, immovable property, accounts in which an individual has signing authority, trusts and any other capital asset held by the individual outside India.

One must be very careful in reporting foreign assets or income in ITR. Any omission or inaccurate particulars may invite penal consequences under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Under the income tax law, a notice for assessment in relation to any asset (including financial interest in any entity) outside India can be served up to 16 years from the end of the relevant assessment year.

An individual qualifying as RNOR is taxable only on the following incomes: income accruing or arising in India; income deemed to accrue or arise in India; income received or deemed to be received in India; income accruing or arising outside India if the income is derived from business controlled in or a profession set up in India. Further, an RNOR is also not required to report foreign assets and related incomes in the India ITR.

Sonu Iyer is tax partner and people advisory services leader, EY India. Send in your queries and views at

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