Presentation on

Residential Status
&
TAX AVOIDANCE and Tax evasion

DEPARTMENT OF MANAGEMENT STUDIES By: Rajshree soni

M.A.N.I.T

To : Prof. Dr. Sweta Shrivastava By :Rajshree Soni

 Content
1 Introduction
Determination of Residential
2
status of different ‘Persons’ :
Types of residential status
3
When an individual is said to be
4 'Resident' in India ?

Exceptions/Concession:
5
Ordinarily Resident
6 (Additional Condition)

7 Non – Ordinarily Resident

8 Non - Resident
9 EXAMPLE
 Introduction
An Assessee may earn his income in India or outside India
or at both the places. Which income is assessable in
India depends on the residential status of assesse.
Residential status of an assessee determines the scope of
chargeability of his income. Whether a person will be
charged to a particular income or not, depends on his
residential status.
 Determination of Residential status of different ‘Persons’ :

 As we know that Income tax is charged on every person. The term ‘Person’ has been
defined under section 2(31) includes :
• An individual
• Hindu Undivided Family
• Firm
• Company
• AOP/BOI
• Local authority
• Every other artificial juridical person not falling in preceding six sub-classes.
• Therefore, it is essential to determine the residential status of above various types of
persons and now we shall learn the calculation of residential status of each type of
person.
 When an individual is said to be 'Resident' in India ?

 An INDIVIDUAL is said to be resident in India if he satisfies any

one of the following two Basic conditions:
I. Resident

A) Stay in India for a year is 182 days or more

OR
B) Stay in India for the immediately 4 preceding years is 365 days or
more and 60 days or more in the relevant financial year
Exceptions

Exception the above rules of 60 days stay in India:

1. An individual who is citizen of India and leave India in any
previous year for the purpose of employment or as a member of
the crew of an Indian ship must have stayed in India for at least
182 days during the previous year instead of 60 days.
2. If any citizen of India or a foreign national of Indian origin, who
is living outside India, comes on a visit to India in the previous
year, He must have stayed in India for at least 182 days during
the previous year instead of 60 Days.
 ADDITIONAL CONDITIONS
TO TEST WHETHER RESIDENT INDIVIDUAL IS
‘ORDINARILY RESIDENT OR NOT [SEC. 6(6)]

• A resident individual in India can further be categorized as –

i) Resident and ordinarily resident in India
ii) Resident but not ordinarily resident in India
Additional Conditions
II. Ordinarily Resident
In order that an individual may become ordinarily resident in India, he is to
satisfy both the following conditions besides satisfying any one of the Basic
condition:

i. He has been resident in India in at least two out of the ten previous
years preceding the relevant previous year, and 
ii. He has been in India for at least 730 days in all during the seven
previous years preceding the relevant previous year.

Taxpoint: To be a Resident & Ordinarily resident in India, one has to satisfy at least one Baisc
condition of sec. 6(1) & both the additional conditions of sec. 6(6).
II. Not Ordinarily Resident
 If a resident individual does not satisfy both additional
conditions as given u/s 6(6), he is “Resident but not ordinarily
resident in India”.
III. Non-resident
 If an individual satisfies none of the aforesaid basic
conditions (a) and (b) stated under the bead Resident
he is said to be Non Resident. In this case additional
conditions are irrelevant.
 EXAMPLE :
• Mr. Dust left India for the first time on November 25, 2015 for meeting
his friends. During the calendar year 2016 he came to India on
September 1 and stayed for a period of 10 days. During the calendar
year 2017, he did not visit India at all but finally came to India on
January 16, 2018. Determine the residential status of Mr. Dust for the
assessment year 2018-19.
 During the previous year 2017-18, the assessee was in India for 75
days(15+28+31) and during the four years preceding the previous year,
he was in India for 979 days (10 days during 2016-17, 239(April-Nov25)
days during 2015-16, 365 days during 2014-15 and 365 days during 2013-
14).
 Thus, he satisfies one of the conditions laid down in section 6(1) for being
treated as resident in India. In addition, the assessee also satisfies the
two additional conditions laid down in section 6(6) as he was resident in
India in 2 years out of 10 years immediately preceding the previous year
2017-18 (during the period 2007-2017 he was resident in India in all the
years except 2016-17) and during 7 years immediately preceding the
previous year 2017-18, he was in India for more than 730 days.
 He will, therefore, be treated as Resident and Ordinarily Resident in India
for the assessment year 2018-19.