Understanding Residential Status: Resident Indian, NRI, PIO, Seafarer & Foreign National

In Indian financial and tax systems, an individual’s residential status determines how they are taxed and what financial privileges they have. Here’s a simplified breakdown of the major categories:

RESIDENT INDIAN

Who is a Resident Indian?

As per the Income Tax Act, an Indian citizen is considered a Resident Indian if;

• They stay in India for 182 days or more in a financial year, OR

• They stay for 60 days or more in the current financial year, and 365 days or more in the previous 4 financial years.

Exception: For Indian citizens leaving India for employment or as a crew member of an Indian ship, the 60 days is replaced with 182 days.

As per FEMA (Foreign Exchange Management Act), a Resident is someone who stays in India for more than 182 days in the previous financial year and intends to stay in India indefinitely.

Key Points:

• Can freely transact, invest, and earn in India.
• Taxed on global income.

NON-RESIDENT INDIAN (NRI)

Who is an NRI?

An NRI is a citizen of India who,

• Resides outside India for employment, business, studies, or other purposes indicating indefinite stay abroad.
• Does not meet the criteria of Resident Indian under Income Tax Act.

Key Points:

• Taxed only on income earned or received in India.
• Subject to FEMA rules for investments and remittances.

PERSON OF INDIAN ORIGIN (PIO) / OVERSEAS CITIZEN OF INDIA (OCI)

Who is a PIO/OCI?

An individual is considered of Indian Origin if they:

• Ever held an Indian passport, OR
• Whose parents or grandparents were Indian citizens, OR
• Are spouses of Indian citizens or other PIOs.

Note: PIO scheme merged with OCI in 2015. All valid PIO cards are deemed OCI cards.

Key Points:

• PIOs/OCIs are foreign nationals, not Indian citizens.
• Enjoy visa-free entry and several rights in India, but cannot vote or hold government office.

FOREIGN NATIONAL

Who is a Foreign National?

A person who is not a citizen of India, does not have PIO/OCI status, and usually enters India on a:

• Tourist visa
• Employment visa
• Student visa
• Business or investor visa

Key Points:

• Can enter India and participate in activities only as permitted by visa.
• Investments, income, and remittances are subject to FEMA and FDI rules.
• Not eligible to vote or own agricultural land.

SEAFARERS

Who are Seafarers?

Seafarers are Indian citizens working on ships or vessels that operate internationally (e.g., in merchant navy). Their residential status depends on:

• The number of days they are outside India
• Their sailing schedule and nature of employment

Classification Criteria:

As per CBDT(Central Board of Direct Taxes) Circular No. 13/2017, a seafarer on a foreign ship is treated as NRI if they stay outside India for 183 days or more in a financial year (as per their Continuous Discharge Certificate (CDC) and passport).

Key Points:

• If they qualify as NRI, they are taxed only on Indian income and not on global income.
• If they do not meet NRI criteria, they are treated as Resident Indian and taxed on global income and not on Indian income.
• Intent to stay and number of days on foreign waters are key for classification.

At a Glance-

Category	Citizenship	Basis of Status	Indian Origin	Global Income Taxable in India	Voting Right
Resident Indian	Indian	≥182 days in India	Yes	Yes	Yes
NRI	Indian	≥183 days outside India	Yes	No	No
PIO/OCI	Foreign	By ancestry or marriage or held Indian passport in past	Yes	No	No
Seafarer (NRI)	Indian	≥183 days outside India (ship)	Yes	No	No
Seafarer (Resident)	Indian	≥182 days in India	Yes	Yes	Yes
Foreign National	Foreign	Visa-based entry	No	Yes	No

Note–

• Residential status is dynamic and must be reviewed every financial year.
• Taxation, investment rights, and banking rules vary depending on the status.
• Special cases like seafarers must maintain proper documentation (passport stamps, CDC log, etc.) to prove their time outside India

Stay tuned! Soon we will cover banking options for each category in detail.