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An individual's tax liability in India is calculated based on his residential status during the financial year in which the income accrues or arises or is received by him. The financial year is defined as the 12-month period starting on April 1st. Residential status, as determined by the Income Tax Act, may vary from year to year and should not be confused with citizenship. Residential status under the Income Tax Act is distinct from other acts such as the Citizenship Act, FEMA, and the Aadhaar Act. An individual may hold resident status in multiple countries in the same year, depending on the tax laws of each country.

Resident Status Classifications:

The Income Tax Law classifies an individual's residence status into two main categories: Resident and Non-Resident. 

Residents are further divided into two categories- Resident and Ordinarily Resident (ROR) and Resident but Not Ordinarily Resident (RNOR). 

This classification considers the individual's stay in the current fiscal year as well as in the previous financial years.

Condition for a person to be Resident:

According to section 6(1) of the Income Tax Act, 1961, an individual is said to be a resident of India in any previous year under if:

• He is in India for a period of 182 days or more during the previous year; or

• He is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

Liberalized provisions applicable for certain categories:

A person who falls under the following categories will not lose his 'Non-Resident' status if he spent 365 days or more in India in the previous 4 years, as long as he doesn't stay for 182 days or more in that financial year. The second condition will be applied in these cases as if the time frame of "sixty days" was replaced with "one hundred and eighty-two days"-

• Who is an Indian citizen and who leaves India during the previous year for the purpose of employment; or

• Indian citizen who leaves India as a member of the crew of an Indian ship; or

• An Indian citizen or a Person of Indian Origin who comes to India on a visit during the previous year; (A person of Indian origin is one in whose case either of his parents or any of his grandparents, was born in undivided India).

The Finance Act of 2020, effective for the Assessment Year 2021-22, has modified the exception mentioned above. It states that the period of 60 days as mentioned in (2) shall be substituted with 120 days, in the case of an Indian citizen or a person of Indian origin, whose total income (excluding foreign sources) exceeds 15 lakhs during the previous year. Income from foreign sources means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India).

Note: Notwithstanding anything contained in clause (1), an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. [Amended vide Finance Act, 2020]

Non Resident (NR):

If an individual does not satisfy any of the above basic conditions then, he will be treated as Non-Resident. It must be noted that the fulfillment of any one of the conditions under section 6(1) of the Act will make an individual resident in India for tax purposes. 

Resident and Ordinarily Resident (ROR):

Any resident individual can be considered as an ordinarily resident if he satisfies both of the following criteria:

• He is a resident for a minimum of two out of the ten years immediately preceding the relevant previous year.

• He has spent 730 or more days in India during the seven previous years immediately preceding the relevant previous year.

Resident but Not Ordinarily Resident (RNOR):

According to section 6(6) of Income Tax Act, 1961, a resident individual is not ordinarily resident if -

• He has been a non-resident in India in nine out of the ten previous years preceding that year, or

• He has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days (729 days) or less, or

• A citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty-two days, or

• A citizen of India who is deemed to be resident in India under clause (1A). 

Taxation on the basis of Residential Status

References:

https://incometaxindia.gov.in/Booklets%2520%2520Pamphlets/02-determination-of-residential-status-under-income-tax-act-1961.pdf

https://taxguru.in/income-tax/residential-status-individual-section-6.html

https://incometaxindia.gov.in/Documents/residential-status.htm