Direct Taxation

Presentation on

Residential Status of Individual,

Company, HUF, AOP, BOI
Sameer Prasad
Roll No. 82

Under the guidance of – Dr. Mahima Singh

 Content
Introduction

Need for residential status

status

Types of residential
residential status
status

Residential
Residential status
status of
of an
an Individual
Individual

Residential
Residential status
status of
of HUF
HUF

Residential
Residential status
status of
of Firm
Firm or
or AOP
AOP

Residential
Residential Status
Status of
of Company
Company
 Introduction
What is residential status?

• Residential status is a term coined

under Income Tax Act and has nothing
to do with nationality or domicile of a
person.

• An Indian, who is a citizen of India can

be non-resident for Income-tax
purposes, whereas an American who
is a citizen of America can be resident
of India for Income-tax purposes.

• Residential status of a person

depends upon the territorial
connections of the person with this
country, i.e., for how many days he has
physically stayed in India.
 Need for Residential status
• The total income is different in case of a person resident in India and
a person non-resident in India. Further, in case of an individual and
HUF being "not ordinarily resident in India", the meaning of total
income shall be slightly different.

• Since the total income of an assessee varies according to his

residential status in India, the incidence of tax shall also vary
according to such residential status in India.
 Types of Residential status
Ordinary resident

For Individual & Hindu

Non-ordinary resident
undivided family

Types of Non-resident
residential
status

Resident
For company, AOP/BOI,
Local authority, Other
artificial juridical persons
Non-resident
Residential status of an Individual
• A person who has never gone out of India is always a resident and
ordinarily resident in India.

Determining whether S/he is resident in India – 

• A person is said to be resident in India if he satisfies at least one of the
following conditions:

I. S/he is in India for a period of 182 days or more in the year

II. S/he is in India for a period of 60 days or more during the year and
365 days or more during the four years immediately preceding the
previous year.

• If a person doesn’t satisfies any of the above two conditions then he is

non resident.
Determining whether S/he is ordinarily resident or not ordinarily
resident-
• A resident individual is treated as Resident and ordinarily resident in
India if he satisfies condition of resident as stated above and also
satisfies both of the following conditions-

I. S/he has been resident in India in at least 2 out of 10 years

immediately preceding the relevant year

II. S/he has been in India for a period of 730 days or more during 7
years immediately preceding the relevant year.

• The person who doesn’t satisfy both of the above conditions is a

resident but not ordinarily resident.
 Residential status of HUF
• A Hindu Undivided Family (HUF) is said to be resident in India if the
control and management of its affairs are wholly or partly situated in India.

• A resident HUF is treated as Resident and ordinarily resident in India if

the Karta (inclusive successive karta) satisfies both of the following
conditions-

I. S/he has been resident in India in at least 2 out of 10 years immediately

preceding the relevant year
II. S/he has been in India for a period of 730 days or more during 7 years
immediately preceding the relevant year.

• If karta doesn’t satisfies any of the above conditions then HUF is treated as
Resident but not ordinarily resident.

• If HUF’s control and management is situated wholly outside India then it is

treated as non resident.
Residential status of Firm or AOP
• A partnership firm or association of
persons is said to be resident in
India if the control and
management of its affairs wholly or
partly situated within India during
the relevant previous year.

• It is however treated as non

resident in India if the control and
management of its affairs are
situated wholly outside India.
 Residential status of Company
• An Indian company is always resident in India.

Residential status of foreign company from Assessment year

2016-17:
• A foreign company will be resident in India if its place of effective
management (POEM) during the relevant previous year is in India.

• For this purpose, the place of effective management means a place

where key management and commercial decisions that are
necessary for the conduct of the business of an entity as a whole are
in substance made.

• For this purpose a set of guiding principles to be followed in

determination of POEM may be issued by the Board of the benefit of
the taxpayers as well as tax administration.
THANK YOU!