1. The Three Possible Outcomes
Under Section 6 of the Income Tax Act, 1961, every individual falls into exactly one of three categories for each financial year:
Non-Resident (NRI) — taxed in India only on income earned or received in India.
Resident but Not Ordinarily Resident (RNOR) — a middle category, taxed broadly like an NRI; foreign income generally stays out of scope.
Resident and Ordinarily Resident (ROR) — taxed on worldwide income, in India and abroad.
This is decided purely by physical presence in India — your passport, citizenship, or visa status are irrelevant to the test itself (though they matter for other things, like whether you're an "Indian citizen or PIO" for one specific relaxation, covered below).
2. Step 1 — Count Your Days in India
Add up every day you were physically present in India during the financial year (1 April to 31 March). Two counting rules to know:
- The day of arrival in India counts as a full day
- The day of departure from India also counts as a full day
Example: Priya, based in Dubai, flies into Mumbai on 10 June and flies back out on 24 June. That's 15 days in India (10th through 24th inclusive), even though she was only "in the country" for parts of the 10th and 24th.
3. Step 2 — Apply the Basic Residency Tests
You are Resident for the year if you meet either of these:
Test A: 182 days or more in India during the year.
Test B: 60 days or more in India during the year, and 365 days or more in India across the preceding 4 years combined.
If you meet neither, you're an NRI for that year — simple as that.
The Gulf-NRI relaxation. For an Indian citizen or Person of Indian Origin (PIO) who is outside India and comes on a visit, the 60-day threshold in Test B is relaxed: it becomes 120 days if your India-sourced income exceeds Rs. 15 lakh in the year, or 182 days if it doesn't. This relaxation exists specifically so NRIs working in the Gulf (or elsewhere) can visit family in India for longer without accidentally tripping into Resident status.
Example: Arjun works in Abu Dhabi, has no India income to speak of, and visits his parents in Pune for 70 days this year. Test A doesn't apply (70 < 182). For Test B, since his India income is below Rs. 15 lakh, his relaxed threshold is 182 days — and 70 is below that too. Arjun remains an NRI this year, even though 70 > 60, because the relaxation applies to him.
4. Step 3 — If Resident, Check RNOR vs ROR
If you've landed on "Resident" from Step 2, there's one more check before you know your full status. You are RNOR (the lighter-touch category) if you meet either of these:
Test C: You were a Non-Resident in India in 9 out of the preceding 10 financial years.
Test D: You were present in India for 729 days or fewer across the preceding 7 financial years.
Meeting neither makes you a full ROR — worldwide income taxable in India.
Example: Meera spent 15 years working in London and just moved back to India permanently in August, ending up Resident this year under Test A (182+ days). Looking back at the preceding 10 years, she was NRI in all 10 of them. She easily meets Test C, so she's RNOR this year — her UK pension, foreign bank interest, and any foreign investment gains stay outside Indian tax for now.
5. Putting It Together — Why This Status Matters
The category you land in determines what India can tax:
NRI: only income that is earned in India, received in India, or accrues/arises in India. A salary paid abroad, foreign bank interest, or gains on a US brokerage account are all outside India's reach.
RNOR: the same scope as an NRI, broadly — foreign income stays out, India income is taxed. This is the valuable transition window for someone returning to India after years abroad (see our companion article on RNOR planning for how to use this window deliberately).
ROR: everything, everywhere — foreign salary, foreign capital gains, foreign rental income, the lot, all reportable and taxable in India (subject to DTAA relief and foreign tax credit where applicable).
Because this is recalculated every single year, someone can be NRI one year, RNOR the next (after moving back), and ROR the year after that — the status is a snapshot of that specific year's facts, not a permanent label.
This article is for informational purposes only and does not constitute legal, tax, or financial advice. Please consult with a qualified professional for advice specific to your situation. Maroon Advisors would be delighted to assist — get in touch.