The residential status of individuals and entities under the Foreign Exchange Management Act (FEMA) is primarily based on specific criteria related to their stay in India during the preceding financial year (FY). Here’s a detailed breakdown:

1. Duration of Stay

• Resident: An individual is considered a resident in India if they have resided in the country for more than 182 days during the previous FY.
• Non-Resident: If an individual has spent 182 days or less in India during the last FY, they are classified as a non-resident.

2. Purpose of Stay

• The purpose of an individual’s stay in India can significantly influence their residential status:
  • Employment or Business: If a person comes to India for employment or business for an uncertain period, this can classify them as a resident.
  • Non-Employment Purposes: Conversely, if an individual enters India for purposes other than employment or business, they may still be classified as a non-resident, regardless of the duration of their stay.

3. Intent and Nature of Departure

• If a person leaves India for employment, business, or vocation for an uncertain period, they will be deemed a non-resident, even if they spent more time in India during the FY.

4. Entities’ Criteria

• For corporate entities, residential status is determined by:
  • Registration or incorporation in India.
  • The ownership or control of offices, branches, or agencies in India by non-residents.
  • The ownership or control of foreign offices by residents of India.