How is a student’s resident status decided?

—Name withheld on request

Under the income tax law, residential status is determined based on the physical presence of an individual in India. If the individual satisfies any of the basic conditions mentioned below, the individual would qualify as a ‘Resident’; otherwise would qualify as a ‘Non-Resident’.

Basic conditions: (a) physical presence in India during the relevant FY is 182 days or more; or (b) physical presence in India during the relevant FY is 60 days or more and 365 days or more in the preceding four FYs. (c) an individual, being a citizen of India, having a total income, other than income from foreign sources, exceeding ₹15 lakh during the relevant FY, if he is not liable to tax in any other country.

Your son, who has been physically present in India for 182 days or more during FY 2022-23, till 30 September 2022, will qualify as a ‘resident’ of India for FY2022-23. Further, once he returns to India in October 2023 and assuming he does not travel outside India, he would be physically present in India for 60 days or more during the FY2023-24 and 365 days or more in the preceding four FYs. In such a case, he would qualify as a ‘resident’ of India for FY24 as well.

The rules for the determination of residential status under the exchange control law are different from that under the income tax law.

Under the exchange control law, when a person leaves India for the purpose of employment, business or any other purpose indicating his intention to stay outside India for an uncertain period, he may be considered a “person resident outside India“.

As your son is not leaving India for any such reason, the residential status under the exchange control law will not change and remain as “person resident in India”. In such cases, there is no requirement to change the status in bank accounts, mutual funds, demat, etc.

Sonu Iyer is tax partner and people advisory services leader, EY India.