RESIDENTIAL STATUS

 For the purpose of taxation, it is residence which is important than citizenship.

 Residential status is determined based on previous year.
 In the case of individuals and Hindu Undivided Family (HUF), there are 3 types of
residential status:
 Resident and ordinarily resident.
 Resident but not ordinarily resident
 Nonresident.
 In case of all other assessees (partnership firm, company, association of persons, local
authority, juridical person, there are 2 types of residential status:
 Resident
 Non resident.

 RESIDENT AND ORDINARILY RESIDENT. SECTION 6(1)

OR

365 DAYS IN TOTAL IN 4 YEARS

PRECEDING THE PREVIOUS YEAR

AND

60 DAYS IN THE PREVIOUS YEAR

 SECTION 6 (6): RESIDENT BUT NOT ORDINARILY RESIDENT

NOT IN INDIA IN 9 OUT OF 10

PREVIOUS YEARS PRECEDING THE PY

OR

NOT IN INDIA FOR A PERIOD OF 730

DAYS OR MORE DURING 7 PREVIOUS
YEARS.

 SECTION 6(2): STATUS OF HUF: (karta)

RESIDENT- If the control and management of its affairs are situated wholly
in India.

RESIDENT BUT NOT ORDINARILY RESIDENT- if the manager has not

been resident in 9 out of 10 previous years preceding the PY or during 7
previous years preceding the PY not in India for a period of 730 days or more.

 SECTION 6(2): STATUS OF ASSOCIATION OF PERSONS:

RESIDENT- if control & management of its affairs is situated in India either

wholly or partly.

NONRESIDENT- if control & management of its affairs is not situated in

India.

 SECTION 6(3): STATUS OF COMPANY:

if it is an Indian Company and control and management wholly or

partly in India.
RESIDENT -

if its control and management is situated wholly in India. (foreign co.)

NON RESIDENT- if the control and management is outside India.

 SECTION 6(4): STATUS OF STATUTORY CORPORATION, LOCAL
AUTHORITY ETC.:

RESIDENT: if control and management is situated wholly in India.

NON RESIDENT: if control and management is situated outside India.

 B.R. Naik v. CIT (1945): the control and management is situated

where directors’ meetings are held.
 Calcutta Jute Mills Co. v. Nicholson: even if trading operations are
carried on outside India, if control and management is wholly in
India, the company is resident in India.

POINTS TO REMEMBER

 The period of stay need not be continuous.

 The date of departure and arrival will be included.
 For the following persons, the condition of 182 days alone will be looked: [Explanation I
to Section 6(1)]
 Indian citizens who leave India in any PY as a member of crew of Indian ship or for
purposes of employment outside India.
 Indian citizen or person of Indian origin engaged outside India in an employment or a
business or profession who comes on a visit to India in any PY.

QUESTIONS:

1. Mr. P an Indian citizen left India on 28th October 2012 for the first time to U.K for the
purpose of employment. He visits India every year and stays here from 15th April to 10th
September since 2015-16. What will be his residential status for the AY 2020-21?

He will not be considered as resident. Because according to the explanation I to

section 6(1), a person who is of Indian origin is engaged in employment outside India and if
visits India in any previous year his stay will not be considered as resident.
2. Mr. X an Indian citizen settled in France visits India for the first time during 2017-18 and
stays for 193 days. Determine his residential status for year 2018-19?

Mr. X will be considered as resident. According to section 6(1), a person can be

considered as resident if he satisfies any one of the conditions, that is, stay of 182 days
or more in previous year or 365 days in 4 preceding years and 60 days in PY. However,
for a person of Indian origin who is settled outside India, if he visits India in any PY, the
rule applicable is as mentioned in Explanation 1 to Section 6(1). For such persons, if
they stay in India for 182 days, then only they will be considered as resident. In the
instant case, Mr. X has stayed in India for 193 days. So he will be considered as resident
and ordinarily resident.

3. Determine the residential status for AY 2014-15 of Varun, an Indian Citizen, who leaves
India for employment in Canada on July 1st, 2013?

Since Varun left India for employment the rule is as in Explanation I to section
6(1). Here PY is 2013-14 (AY being 2014-15). In the PY 2013-14 Varun was in India
for 92 days (April 30 days, May 31 days, June 30 days and 1 day in July). Since he was
not in India for 182 days he cannot be considered as resident.