RESIDENTIAL STATUS AND TAX INCIDENCE

RESIDENTIAL STATUS OF INDIVIDUALS [SEC.6(1)] Residential Status Classification

Resident

Non-Resident

Resident and Resident but not Ordinarily resident(RNOR) Ordinarily Resident (ROR) Basic Conditions: 1. If the Individual stayed in India for a period of 182 DAYS OR MORE during the Relevant Previous Year (RPY) he is Resident of India (OR) 2. If he stayed in India for a period of 60 DAYS OR MORE during Relevant Previous Year (RPY) and 365 DAYS OR MORE during the four preceding previous years he is Resident of India. If the above two conditions are not satisfied, he is NonResident. Note: The day on which he enters India as well as the day on which he leaves India shall be taken into account as the stay of the Individual in India. Special Exceptional Situations: For the following persons, condition mentioned in 1(a) above only shall apply to determine their Residential Status (a) Individual, Indian citizen, leaving India for employment outside India, or (b) Indian Citizen being a crew member of an Indian ship leaving India, or (c) Individual, Indian citizen or person of Indian origin, visiting India. Additional Conditions: Sec. 6(6)(a) 1. Resident in India for at least 2 years out of the preceding 10 previous years. 2. Physically present in India for at least 730 days during the 7 preceding previous years.

Status of an Individual Resident and ordinarily Resident u/s 6(6)

Basic condition Additional condition/(s) Satisfies Satisfies both the conditions May or may not satisfy any of the additional condition Not required to check

Resident but not ordinarily Resident u/s Satisfies 6(6) Non Resident Fails to satisfy

RESIDENTIAL STATUS OF HUF/FIRM/AOP/EVERY OTHER PERSON [Sec. 6(2), SEC.6(4)] Control and Management is 1. Wholly or partly in India 2. Wholly outside India Residential Status Resident Non-resident

RESIDENTIAL STATUS OF A COMPANY [SECTION 6 (3)]

1. Indian Company 2. Other Companies - Control and management is (a) Wholly in India (b) Wholly or partly outside India

Resident

Resident Non-resident

If a person is a resident for one source of income in a previous year, he shall be deemed to be a resident for all other sources of income also. [Section 6(5)]

STATUS AND INCIDENCE OF INCOME-TAX The incidence of tax on a tax-payer depends on his residential status as well as on the place and time of accrual or receipt of income. A suitable table is given below : Particulars of income Tax incidence in case of Resident but not NonResident ordinarily resident resident YES YES YES YES YES YES

a. Income received in India whether accrued in India or outside India b. Income deemed to be received in India whether accrued in India or outside India. c. Income accruing or arising in India whether received in India or outside India. d. Income deemed to accrue or arise in India,whether received in India or outside India. e. Income received and accrued outside India from a business controlled in profession set up in India f. Income received and accrued outside India from a business controlled from outside India or profession set up outside India. g. Income earned and received outside India but later on remitted to India. Total

YES

YES

YES

YES

YES

YES

YES

YES

NO

YES

NO

NO

NO A to F

NO A to E

NO A to D