Business

Checklist for salaried employees filing income tax return in India is one of the most requested resources for FastLegal clients. Salaried individuals often pay TDS through their employer but still worry about missing steps at the time of filing their return. This article gives a detailed checklist for salaried employees filing income tax return in India under the new regime.

Why a checklist for salaried employees filing income tax return in India is important

Even if TDS on salary is correctly deducted, a checklist for salaried employees filing income tax return in India helps you:

• Confirm that your Form 16 matches Form 26AS and AIS.
• Report other income such as interest, capital gains or rental income.
• Claim eligible deductions that may not be considered by employer.
• Avoid notices due to mismatch or non reporting.

A structured approach based on this checklist for salaried employees filing income tax return in India will make the filing process faster and more accurate.

Step 1: Collect salary and TDS documents

Start your checklist for salaried employees filing income tax return in India by collecting the following documents:

1. Form 16 from your current and any previous employer.

2. Salary slips for the full year, especially for months with bonus or arrears.

3. Form 12BB or other investment declaration forms submitted to employer.

4. Any communication from employer about tax regime selection and perquisite valuation.

Related: TDS on salary in India under new income tax act (link: /blog/tds-on-salary-in-india-under-new-income-tax-act)

Step 2: Reconcile Form 26AS and AIS

Log in to the Income Tax portal and download Form 26AS and AIS. Then:

• Match TDS from Form 16 with entries in Form 26AS.
• Check interest, dividends and other incomes reported in AIS.
• Identify any income which appears in AIS but is missing in your records.

If there are errors in AIS, use the feedback options on the portal to flag them. This step is critical in the checklist for salaried employees filing income tax return in India because mismatches can trigger automated notices.

Useful link: https://www.incometax.gov.in

Step 3: Compile other income details

Many salaried taxpayers forget to include other income. Your checklist for salaried employees filing income tax return in India should cover:

• Interest on savings accounts and fixed deposits.
• Interest on recurring deposits or corporate bonds.
• Rental income from house property after deducting municipal taxes and standard deduction.
• Capital gains from sale of shares, mutual funds or property.

Make a simple table in a spreadsheet to summarise each income category, with supporting documents like bank statements and contract notes.

Related: Income tax rules for NRIs investing in India, also relevant when salaried NRIs have investments (link: /blog/income-tax-rules-nris-investing-india)

Step 4: Review deductions and tax regime choice

Under the new income tax act, salaried employees may have a choice between regimes depending on final legislation. Your checklist should include:

1. List of deductions claimed through employer

• Standard deduction.
• HRA exemption where applicable.
• Deductions for eligible investments, insurance and NPS.

2. Additional deductions to be claimed directly in return

• Interest on housing loan for self occupied or let out property, as permitted.
• Donations eligible for deduction.
• Certain education loan interest or specified expenses if allowed.

3. Compare tax liability under available regimes using the official calculator on the portal.

Related: New income tax act for small businesses in India, useful if you also have side business income (link: /blog/new-income-tax-act-small-businesses-in-india)

Step 5: Choose correct ITR form and fill details

Checklist for salaried employees filing income tax return in India must include selection of correct ITR form based on:

• Residential status.
• Type of income, for example salary only, salary plus house property, or capital gains.
• Holding of foreign assets or signing authority in foreign accounts.

After selecting the form:

1. Pre fill data using the online utility on the portal.

2. Cross check every pre filled field against your documents.

3. Enter missing details for other income and deductions.

4. Verify bank account details for refund.

Step 6: Verify, e file and e verify

Once computation is complete:

• Review tax computation summary and payable or refundable amount.
• Make self assessment tax payment if required and add challan details.
• Submit return on the portal within due date.
• Complete e verification using Aadhaar OTP, net banking or other available methods.

Without e verification, your return is not treated as filed. This is a key checkpoint in the checklist for salaried employees filing income tax return in India.

Step 7: Maintain records for future

After filing, keep a digital folder containing:

• Filed ITR acknowledgement.
• Final tax computation.
• Form 16, Form 26AS and AIS copy.
• Challans for tax payments.
• Key supporting documents like rent receipts, loan statements and donation receipts.

Related: Checklist for non residents filing income tax return in India (link: /blog/checklist-non-residents-filing-income-tax-return-india)

A carefully prepared checklist for salaried employees filing income tax return in India reduces stress during the filing season and minimises the chances of errors or notices. FastLegal can help you design a personalised checklist and review your return before filing, especially if you have multiple employers, ESOPs or cross border income.

Primary keyword: company registration in India

Company registration in India can feel confusing if you are a first time founder. This guide explains company registration in India in plain language so you can choose the right structure, understand the registration steps, and avoid common mistakes.

We will focus on private limited companies, LLPs and one person companies, since these are the most common choices for Indian startups and small businesses.

Why company registration in India matters for founders

Many founders start with a simple idea and delay formal company registration in India. That usually creates problems later when you try to raise funding, open a business bank account, or sign proper contracts.

Some key reasons to register your company early:

1. Limited liability protection for founders.

2. Clear ownership structure with shareholding or partnership ratios.

3. Easier to sign contracts with clients, vendors and employees.

4. Access to bank loans, investors and government schemes.

5. Better branding and trust in the market.

Common types of business entities in India

Private limited company in India

This is the most popular form for startups that want to grow and raise investment.

Key features:

• Separate legal entity from the founders.
• Limited liability for shareholders.
• Shares can be issued to investors.
• Suitable for technology, product and service businesses across India.

Typical use case: funded or fundable startups, scalable product and service businesses, SaaS and IT companies.

Limited liability partnership (LLP) in India

LLP combines features of a partnership and a company.

Key features:

• Partners have limited liability.
• Compliance is lighter compared to a private limited company.
• Profit distribution is flexible.

Typical use case: professional services firms, consulting, CA and legal firms, small stable businesses that do not plan to raise equity funding.

One person company (OPC) in India

OPC is suitable when there is a single promoter who wants limited liability but does not have co founders yet.

Key points:

• Only one shareholder at the time of incorporation.
• Can later be converted into a private limited company when the business grows.

Factors to consider before choosing a business entity

Before you start the company registration in India, think about these practical points:

1. Number of founders and expected partners.

2. Will you raise equity funding in the next 1 to 3 years.

3. Expected turnover and profits.

4. Type of business activities and any specific licenses needed.

5. Compliance budget and your comfort with annual filings.

As a rule of thumb:

• If you are building a startup that may raise funding, a private limited company is usually the best choice.
• If you are running a professional or consulting practice, an LLP often works well.
• If you are solo but want limited liability now, an OPC is worth considering.

Step by step process for private limited company registration in India

The high level process on the Ministry of Corporate Affairs (MCA) portal is as follows.

1. Obtain Digital Signature Certificates for directors.

2. Apply for Director Identification Number if needed.

3. Decide the company name and object clause.

4. Draft the Memorandum and Articles of Association.

5. File incorporation forms with MCA using SPICe+.

6. Receive Certificate of Incorporation, PAN and TAN.

7. Open a current account with a bank in India.

You can access the official incorporation forms and updated fee details at the MCA website: https://www.mca.gov.in

Typical timelines and documents

Most straightforward company registrations in India take 7 to 15 working days depending on name approval and document readiness.

Common documents required:

• PAN and Aadhaar of directors.
• Passport for foreign directors, if any.
• Latest address proof for directors.
• Proof of registered office such as electricity bill, rent agreement or ownership document.
• NOC from the owner of the registered office, if the premises are rented.

Common mistakes founders should avoid

1. Picking a company name that is too similar to an existing brand without checking.

2. Adding very broad objects in the Memorandum without thinking about real activities.

3. Not discussing shareholding percentages between co founders in writing.

4. Ignoring founder agreements and vesting.

5. Missing post incorporation compliances such as first board meeting and opening of bank account.

Taking basic legal and tax advice at the start saves a lot of time and cost later.

Post incorporation compliances in India

After the company registration in India is complete, there are a few practical steps every founder should plan for:

• Apply for GST registration if your turnover or business model requires it.
• Register with the Shops and Establishments authority if applicable in your state.
• Set up proper accounting and invoicing systems.
• Put in place key business agreements and employment or consulting contracts.

You can check GST registration and rules on the GST portal: https://www.gst.gov.in

When should founders consider converting to a different entity type

Sometimes businesses start as a partnership or proprietorship and later need to convert to a company or LLP.

Common triggers:

• Investor interest and term sheets.
• Need for limited liability and better risk management.
• Bankers and large clients insisting on a company structure.

In such cases, plan the conversion carefully so that tax and stamp duty impact is manageable and contracts are migrated properly.

Related: How to choose between private limited company and LLP in India (link: /blog/private-limited-vs-llp-india)

Related: Checklist for startup company registration documents in India (link: /blog/startup-company-registration-documents-india)

Related: Post incorporation compliances for private limited companies in India (link: /blog/post-incorporation-compliances-private-limited-india)

NRIs with links to India—family, property, investments, or business interests—often underestimate their Indian tax obligations.

This guide summarises scope of income and common compliance gaps for NRIs in 2026.

What income is taxable in India for NRIs

Generally, India taxes:

• Income **received in India** or deemed to be received in India
• Income **accruing or arising in India** (rent from Indian property, interest from Indian bank accounts, capital gains on Indian securities, etc.)

Residential status, DTAA provisions and specific exemptions can modify this, but the starting point is scope of income.

Common NRI compliance gaps

• Not reporting **interest on NRO accounts** or small rent receipts
• Incorrect TDS or no TDS on sale of property
• Confusion over capital gains on unlisted shares or startup ESOPs linked to Indian entities

NRIs should maintain a clear India‑specific income and asset summary and work with advisors familiar with cross‑border issues.

Income tax rules for NRIs under new income tax law in India are critical for anyone who lives or works abroad but has income or investments connected with India. This post explains the key income tax rules for NRIs under new income tax law in India, focusing on residential status, taxable income, TDS, and compliance steps.

Understanding income tax rules for NRIs under new income tax law in India

The starting point for income tax rules for NRIs under new income tax law in India is the definition of Non Resident. Residential status is determined each year based on days of stay and other conditions in the new Income tax Act.

Once a person qualifies as an NRI for a particular year, income tax rules for NRIs under new income tax law in India generally provide that only certain categories of income are taxable in India, for example:

• Income received in India.
• Income that accrues or arises in India.
• Income deemed to accrue or arise in India, such as certain interest, royalty, or capital gains.

Global income is usually not taxable in India for NRIs, subject to anti avoidance rules and special provisions.

Related: Residential status under new income tax law (link: /blog/residential-status-under-new-income-tax-law)

Common income heads under income tax rules for NRIs under new income tax law in India

Typical income streams covered by income tax rules for NRIs under new income tax law in India include:

1. Interest on NRO accounts.

2. Rental income from property in India.

3. Capital gains on sale of shares, securities, or property in India.

4. Dividend income from Indian companies.

5. Fees for technical services or professional income earned from India.

Each category may have specific TDS rates and special provisions, including lower rates under tax treaties.

TDS and lower deduction certificates under income tax rules for NRIs under new income tax law in India

Income tax rules for NRIs under new income tax law in India often rely on TDS as a primary mode of tax collection. For example:

• Banks deduct TDS on NRO interest.
• Buyers deduct TDS on purchase of property from NRIs.
• Companies and payers deduct TDS on fees and royalties.

If the actual tax liability is lower than the standard TDS rates, NRIs can consider applying for a lower deduction certificate or a nil deduction certificate under the relevant section. This requires:

1. Filing an application with the Assessing Officer in the prescribed form.

2. Providing estimated income and tax computation.

3. Submitting necessary supporting documents and past tax return details.

Related: TDS on property purchase from NRI seller (link: /blog/tds-on-property-purchase-from-nri-under-new-law)

Double taxation relief under income tax rules for NRIs under new income tax law in India

Many NRIs are also tax residents of another country. Income tax rules for NRIs under new income tax law in India interact with Double Taxation Avoidance Agreements to prevent double taxation.

Key steps:

1. Identify residential status in India and in the foreign country.

2. Review the applicable DTAA between India and the foreign country.

3. Apply tie breaker rules if both countries treat the person as resident.

4. Claim credit in the home country for taxes paid in the source country, where allowed.

NRIs should maintain tax residency certificates and foreign tax payment proofs to support claims. Official DTAA texts can be accessed through the Income Tax Department or Ministry of Finance websites.

Compliance checklist for income tax rules for NRIs under new income tax law in India

To stay compliant with income tax rules for NRIs under new income tax law in India, consider this step by step checklist:

1. Determine residential status at the start of each financial year.

2. List all India linked incomes and investments.

3. Check applicable TDS rates and possible treaty benefits.

4. Ensure correct TDS deduction and deposit by payers.

5. File the correct income tax return form within the due date.

6. Report foreign assets if the law requires it for the year.

External reference hints:

• Income Tax Department portal: https://www.incometax.gov.in
• DTAA related information and notification links are accessible through the portal or Ministry of Finance site.

Related: Step by step return filing guide for NRIs (link: /blog/step-by-step-return-filing-guide-for-nris-under-new-law)

The new income‑tax regime has altered slabs, deductions and planning strategies for many small businesses and proprietors in India.

This overview highlights key changes founders should track in 2026.

Different treatment for individuals and companies

Understand the distinction between:

• Tax on **company profits** (for private limited companies), and
• Tax on **individual income** (salary, dividend, interest, capital gains) for founders.

Decisions on salary vs dividend, bonus vs distribution and business structure all interact with the new regime.

Deductions and exemptions

Under the new regime, many traditional deductions are forgone in exchange for lower tax rates. Founders should:

• Compare tax payable under old vs new regime with realistic income projections
• Consider impact on **ESOP exercises**, bonuses and exit events

A one‑time spreadsheet exercise with your CA can clarify which regime suits you for the next few years.

Documentation still matters

Even when deductions reduce, the department still relies on:

• Clean books of account
• Reconciled bank statements
• Proper documentation for major transactions

The new regime changes rates and options—not the importance of basic compliance hygiene.

The new income tax act for small businesses in India aims to simplify compliance while still ensuring proper tax collection. This post explains how the new income tax act for small businesses in India applies to proprietorships, partnerships, LLPs, and closely held companies that operate in India.

Who is covered under the new income tax act for small businesses in India

The expression small business is not a formal legal definition in the new Income tax Act, but in practice the new income tax act for small businesses in India is most relevant for:

• Proprietorships and family run businesses.
• Partnership firms and LLPs.
• Small private limited companies and startups.
• Freelancers and gig workers who operate as individuals.

These taxpayers often face limited resources and need clear, actionable guidance on registration, tax payments, and filings.

Related: Practical guide to income tax for freelancers (link: /blog/practical-income-tax-guide-for-freelancers-under-new-law)

Tax regimes and rates under the new income tax act for small businesses in India

Under the new income tax act for small businesses in India, tax rates depend on the legal form and the chosen regime. Broadly:

• Proprietorships are taxed at slab rates applicable to individuals.
• Partnership firms and LLPs are taxed at a flat rate plus applicable surcharge and cess.
• Companies are taxed at corporate tax rates, with possible concessional regimes if conditions are met.

Small businesses must choose the most beneficial regime based on turnover, profit margins, and eligibility conditions. The decision affects advance tax payments, MAT or alternate provisions, and eligibility for deductions.

Compliance calendar under new income tax act for small businesses in India

A simple compliance calendar helps small businesses stay on track under the new income tax act for small businesses in India.

Key items:

1. PAN and TAN registration where required.

2. Monthly or quarterly TDS deductions and payments.

3. Advance tax instalments on the dates notified in the Act.

4. Yearly income tax return filing in the correct form.

5. Filing of tax audit report if turnover or receipts cross prescribed limits.

Sample checklist:

1. At the start of the year:

1. Decide the applicable tax regime.

2. Estimate expected turnover and profits.

2. Every month:

1. Track sales and receipts with GST and TDS impact.

2. Reconcile vendor TDS, TCS and other tax credits.

3. Every quarter:

1. Review profit estimates and adjust advance tax.

2. Check compliance with TDS and TCS obligations.

4. At year end:

1. Finalise books of account.

2. Complete tax audit if applicable.

3. File the income tax return.

Related: Income tax calendar for small businesses (link: /blog/income-tax-calendar-for-small-businesses-under-new-act)

Presumptive taxation and reliefs under new income tax act for small businesses in India

The new income tax act for small businesses in India may continue to offer presumptive taxation options for eligible small taxpayers, subject to revised limits and conditions. Under presumptive schemes, income is computed at a prescribed percentage of turnover, and books maintenance may be simplified.

Points to consider:

• Check turnover thresholds and eligible sectors.
• Understand the consequences of opting in or out of presumptive schemes.
• Track digital receipts separately if beneficial rates apply.

Small businesses should evaluate whether presumptive provisions under the new income tax act for small businesses in India give genuine relief compared to normal computation.

Assessments, scrutiny, and risk management under new income tax act for small businesses in India

Small businesses often fear notices and assessments. Under the new income tax act for small businesses in India, tax authorities may use technology driven, risk based selection for scrutiny. To reduce risk:

• Maintain proper books and supporting documents.
• Match turnover and receipts reported in income tax returns with GST and TDS data.
• Respond promptly and accurately to e notices.
• Avoid cash intensive practices that do not match declared figures.

Small businesses should use the Income Tax Department e filing portal and official utilities to file accurate returns and respond to notices.

External reference hints:

• Income Tax Department portal: https://www.incometax.gov.in
• E filing services and utilities: accessible through the e filing section of the portal.

Related: Handling income tax notices for small businesses (link: /blog/handling-income-tax-notices-for-small-businesses-under-new-law)

For Indian employers, deducting and depositing **TDS on salary** correctly is a core compliance responsibility. With changes in slabs and default regimes, payroll teams must be careful.

This checklist focuses on practical steps for TDS on salary under the new regime.

Collect declarations and regime choice

Employers should:

• Obtain tax regime declarations from employees within prescribed timelines
• Collect information on other income and eligible deductions where relevant

While employers are not required to verify every detail, having declarations on record supports the TDS position.

Compute taxable salary correctly

Key points:

• Include all components: basic, allowances, perquisites, bonuses, ESOP exercises, etc.
• Apply exemptions and deductions correctly (for example, HRA, standard deduction), depending on the chosen regime.
• Consider relief provisions where applicable.

Errors here can trigger employee grievances and departmental queries.

Deduct and deposit TDS on time

• Deduct TDS each month based on estimated annual income.
• Deposit TDS within due dates to avoid interest and penalties.
• File quarterly TDS returns correctly and issue Form 16 on time.

Use checklists and calendar reminders—TDS non‑compliance can be expensive.

A periodic review of payroll processes with a tax professional can help employers stay updated with changes and avoid surprises.

TDS on salary in India under new income tax law is one of the most important monthly compliance tasks for employers and payroll teams. This guide explains how TDS on salary in India under new income tax law works, what employers must do every month, and how employees can check if the correct tax has been deducted.

Who is responsible for TDS on salary in India under new income tax law

Under the new Income tax Act, every employer paying salary that is taxable in India must deduct TDS on salary in India under new income tax law at the time of payment. This obligation applies to:

• Companies and LLPs.
• Partnership firms and proprietorships.
• NGOs and trusts.
• Branch offices and liaison offices that have employees in India.

The employer is treated as the person responsible for deducting TDS and depositing it with the government.

Related: New income tax act for small businesses and startups (link: /blog/new-income-tax-act-for-small-businesses-and-startups)

How to compute TDS on salary in India under new income tax law

The basic steps to compute TDS on salary in India under new income tax law are:

1. Estimate total salary income for the financial year for each employee.

2. Collect declarations for investments and eligible deductions from the employee.

3. Consider perquisites, allowances, and any other taxable benefits.

4. Reduce eligible exemptions and deductions as per the new Income tax Act and Rules.

5. Compute estimated annual tax liability using the applicable tax slab rates.

6. Divide the total tax by the remaining months in the year to arrive at monthly TDS.

Employers should review declarations at mid year and at year end so that TDS on salary in India under new income tax law is broadly aligned with final tax liability.

Payroll process checklist for TDS on salary in India under new income tax law

A practical payroll checklist for TDS on salary in India under new income tax law should include:

1. Employee onboarding:

1. Collect PAN, Aadhaar and basic KYC.

2. Obtain declaration of previous employer salary and TDS.

3. Capture tax regime selection if options are available under the new Act.

2. Monthly payroll run:

1. Calculate gross salary and perquisites.

2. Apply exemptions for eligible allowances as per rules.

3. Calculate TDS on salary in India under new income tax law using year to date income.

3. Post payroll compliance:

1. Deposit TDS within the prescribed due date.

2. File quarterly TDS returns in the correct form.

3. Issue salary TDS certificates to employees.

Related: Payroll compliance checklist under new income tax regime (link: /blog/payroll-compliance-checklist-under-new-income-tax-regime)

Due dates and returns for TDS on salary in India under new income tax law

Compliance for TDS on salary in India under new income tax law includes both payment and reporting:

• TDS payment: Monthly due date is generally the 7th of the following month, with separate timelines for March deductions if notified.
• Quarterly TDS return: Employers must file the prescribed TDS statement (for example Form 24Q or its equivalent under the new Income tax Rules) by the notified due dates.
• TDS certificate: Salary TDS certificates must be issued to employees in the prescribed format, usually after each quarter or at year end.

Late payment of TDS on salary in India under new income tax law attracts interest and penalties. Incorrect or delayed TDS returns can also lead to late fee and possible penalty.

Employee view: how to verify TDS on salary in India under new income tax law

Employees should not assume that all TDS is always correct. To safeguard yourself, verify TDS on salary in India under new income tax law as follows:

1. Check monthly payslips to see the exact TDS amount and tax regime applied.

2. Download Form 26AS or the new Annual Information Statement (AIS) from the Income Tax portal.

3. Match the TDS figures reported by the employer with the amounts credited in the portal.

4. If there is any mismatch, raise it with the employer payroll team immediately.

If an employer fails to deposit TDS on salary in India under new income tax law, employees may face difficulty in claiming credit at the time of filing returns. Early detection helps in getting the issue corrected.

Common mistakes and risk areas for TDS on salary in India under new income tax law

Some recurring issues seen in practice with TDS on salary in India under new income tax law are:

• Ignoring previous employer income, leading to short deduction.
• Not adjusting for mid year changes in salary structure or bonus payouts.
• Misclassification of reimbursements versus perquisites.
• Applying old exemption rules instead of the new Act and Rules.
• Delay in changing employee regime option where permitted.

Employers should periodically review their payroll process and use official utilities or rule references from the Income Tax portal to ensure compliance.

External reference hints:

• Income Tax Department portal: https://www.incometax.gov.in
• TDS related utilities and rules are available under the Downloads or Tax Services sections.

Related: Step by step guide for TDS compliance under new income tax rules (link: /blog/step-by-step-tds-compliance-under-new-income-tax-rules)

Residential status is one of the most misunderstood concepts in Indian income‑tax law. Yet it directly affects **which income is taxable in India** for NRIs, returning Indians and founders who travel frequently.

This guide explains residential status under the new regime and why it matters.

Basic tests for residential status

In simplified terms, residential status depends on the **number of days you stay in India** in a financial year and over a rolling period. The law defines tests for:

• Resident and ordinarily resident
• Resident but not ordinarily resident
• Non‑resident

Different tests and thresholds can apply depending on your Indian income and citizenship.

Why residential status matters

Your residential status determines:

• Whether **global income** is taxable in India or only Indian‑sourced income
• Eligibility for certain deductions and exemptions
• TDS requirements and reporting in returns

NRIs often face surprises when their status changes but their tax planning does not.

Practical steps for NRIs and mobile founders

• Keep a **day‑count tracker** for time spent in India.
• Before changing jobs, relocating or extending stays, discuss impact on residential status with your tax advisor.
• Review foreign income (salary, ESOPs, investments) and map which parts may become taxable in India.

Good planning prevents double taxation and messy disputes later.

Residential status under new income tax law in India is the starting point for determining how much of your income is taxable in India. This post explains residential status under new income tax law in India for salaried individuals, small business owners, and professionals who want to know whether their global income is taxable in India or only India-sourced income.

Why residential status under new income tax law in India matters

Residential status under new income tax law in India decides the scope of total income that is chargeable to tax. Residents are generally taxed on global income, while non residents are usually taxed only on income that is received in India or accrues or arises in India. The new Income tax Act follows the same basic principle but fine tunes the days-of-stay conditions and tie breaker tests.

Key points:

1. Residential status is checked separately for each financial year.

2. Citizenship and residential status are different concepts.

3. The number of days you stay in India is the primary test, but certain exceptions apply for Indian citizens and Persons of Indian Origin (PIOs).

Related: Determining scope of total income (link: /blog/scope-of-total-income-under-new-income-tax-law)

Basic conditions for residential status under new income tax law in India

Although terminology may vary slightly in the new Income tax Act compared to the earlier law, the core tests for residential status under new income tax law in India continue to revolve around period of stay in India.

In practice, for most taxpayers, you will be resident in India in a financial year if:

1. You are in India for at least 182 days during that financial year, or

2. You are in India for at least 60 days in that financial year and at least 365 days during the 4 years immediately preceding that year.

However, there are important modifications for:

• Indian citizens leaving India for employment outside India.
• Indian citizens or Persons of Indian Origin who visit India.

For these categories, the 60 day condition may be replaced with a higher threshold (for example 120 days or 182 days) based on prescribed conditions. Taxpayers in these categories should carefully track their days of stay and review the latest CBDT circulars.

Related: New income tax act for NRIs and returning Indians (link: /blog/new-income-tax-act-for-nris-and-returning-indians)

Categories of residential status under new income tax law in India

Under the new Income tax Act, residential status under new income tax law in India is generally divided into three broad categories:

1. Resident and ordinarily resident (ROR).

2. Resident but not ordinarily resident (RNOR).

3. Non resident (NR).

The ROR category usually faces taxation on global income, subject to reliefs and treaty protection. RNOR is a transition category where only certain incomes are taxable in India. NR is typically taxed only on India sourced income.

The precise tests for ROR and RNOR usually look at:

• Total years of residence in India during a previous period (for example 10 preceding years).
• Total number of days stayed in India during a longer block (for example 7 preceding years).

Always check the exact statutory language in the applicable section and rule to classify correctly.

Practical steps to determine residential status under new income tax law in India

Follow this step by step approach to work out your residential status under new income tax law in India for each financial year:

1. Prepare a day wise travel summary showing dates of entry into and exit from India.

2. Count total days of physical presence in India during the financial year.

3. Identify whether you are an Indian citizen, a Person of Indian Origin, or a foreign citizen.

4. Check if you left India for employment or came to India on a visit.

5. Apply the basic conditions and special thresholds as per the new Income tax Act.

6. Classify yourself as resident or non resident.

7. If resident, apply further tests to decide whether you are ROR or RNOR.

This simple worksheet approach minimises errors and can be maintained in a spreadsheet for each year.

Related: Residential status checklist for NRIs (link: /blog/residential-status-checklist-for-nris-under-new-law)

Impact of residential status under new income tax law in India on scope of income

Once you know your residential status under new income tax law in India, you can map the scope of income as follows (subject to specific exemptions and treaty reliefs):

• Resident and ordinarily resident: Global income is taxable in India, subject to double taxation relief.
• Resident but not ordinarily resident: Income that accrues or arises outside India may be taxable only in limited circumstances (for example business controlled from India).
• Non resident: Only income that is received in India or deemed to be received in India, or that accrues or arises in India or is deemed to accrue or arise in India, is taxable.

Taxpayers should also consider:

1. Relief under applicable Double Taxation Avoidance Agreements (DTAAs) for cross border income.

2. Tie breaker tests where another country also treats the person as resident.

3. Disclosure requirements for foreign assets if they fall within the reporting framework.

Compliance and documentation tips

To support your residential status under new income tax law in India in case of scrutiny:

• Keep boarding passes, passport copies, and travel tickets safely.
• Maintain a consolidated travel summary for several years.
• Retain foreign tax returns and residency certificates where applicable.
• For NRIs, keep documents evidencing employment or business outside India.

For more details, taxpayers can check the official Income Tax Department website and relevant CBDT circulars, and should refer to the bare text of the new Income tax Act and rules for exact definitions and exceptions.

External reference hints:

• Income Tax Department website: https://www.incometax.gov.in
• CBDT notifications: search for residential status and NRI related circulars on the official portal.