How often you travel—and where you’re based—can decide your tax residency

Q: I am a salaried individual employed with an Indian company that allows remote work. I get paid in India. My spouse lives abroad, so I keep travelling outside. For the last two years, I have spent at least three months every year in India. For tax purposes, am I still a resident? When will I become an NRI if this arrangement continues?

An individual can be resident in India even if the number of days stayed is below 182 during the year, provided the stay during the year is 60 days and the individual has stayed in India for at least 365 days in the last four years.

The exception to this condition of 60 days in a year is in the case of an Indian citizen or a person of Indian origin who visits India during the year. In such a scenario, the individual is resident in India only if the stay in India during the year exceeds 120 days and 365 days during the last four years.

Your residential status would depend on whether your facts indicate that you are primarily based in India and visit abroad, or if you are primarily based abroad and visit India. If you are based abroad and are visiting India during the year, you would be considered a ‘not ordinarily resident’ so long as your stay in India is between 120 and 182 days during the year (assuming your income from Indian sources, which includes your salary, would exceed ₹15 lakh). In such a situation, you would be a non-resident only if you are in India for less than 120 days during the year.

Resident or non-resident

On the other hand, if you are based in India and visit your wife abroad, then you would continue to be a resident in India so long as your stay in India during the year exceeds 60 days and 365 days in the last four years. You would be a non-resident only if your stay during the year is less than 60 days or if your stay in the last four years is less than 365 days.

Various courts have held that a visit to India indicates a temporary or short stay. Some documents that can help determine whether you are visiting India or visiting abroad depend on the tickets (whether you book a return ticket from abroad when you come to India or whether you book a return ticket from India when you visit abroad) and the type of visa on the basis of which you are staying abroad.

You may note that even if your stay in India is less than the number of days as indicated above, you may still be deemed a resident of India if, being a citizen of India, you are not liable to tax in any other country by reason of stay or domicile.

Mahesh Nayak, chartered accountant, CNK & Associates.
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