As tax season approaches, it’s time to revisit a fundamental question:
What’s your residential status?
This isn’t just a formality—it’s a crucial piece of the tax puzzle that determines your tax liability in India.
🌏 Residential Status: More Than Just a Label Your residential status under the Income Tax Act is more than a mere classification; it’s a key determinant of how your income is taxed.
Whether you’re a Resident and Ordinarily Resident (ROR), Resident but Not Ordinarily Resident (RNOR), or Non-Resident (NR), each category carries its own tax implications.
📅 The 182-Day Rule & Beyond The rules are clear-cut yet intricate:
ROR: Spend at least 182 days in India during the fiscal year, and you’re considered a resident.
RNOR: Strong ties to India but not meeting the ROR criteria? You might fall under this category.
NR: Less than 182 days in India? You’re likely a non-resident for tax purposes.
💼 Why Does It Matter?
Your residential status affects everything from your tax liability to your eligibility for Double Taxation Avoidance Agreements (DTAA). It’s not just about where you live; it’s about where you’re taxed.
🔍 The Impact on Your Tax Returns Understanding your residential status is essential for accurate tax returns.
It influences whether you’re taxed on global income or just income earned in India, and it dictates your tax filing requirements.
As professionals, we must stay informed and compliant.
Knowing your residential status isn’t just good practice—it’s a responsibility.
Let’s embrace this aspect of financial literacy and lead with knowledge.
