Presentation on
residential status & its incidence
on tax liability
Residential status of an
individual (sec.6)
An individual may be :
1. Resident and ordinarily resident (R)
2. Resident but not ordinarily resident
(NOR)
3. Non-resident (NRI)
CONDITIONS
BASIC conditions (sec.6 (1)) :
An individual is said to be resident, if he satisfies at least one
of the following conditions:
He is in India in the previous year for a period of 182 days or more.
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.
Exception : assessment year 1990-91 onwards – an Indian citizen
who leaves india during the previous year for the purpose of employment
outside india or an indian citizen who leaves as a member of the crew of
an Indian ship – 182 DAYS. (Only a person of indian origin can take the
benefit of this exception )
CONDITIONS
ADDITIONAL conditions (sec.6 (6)):
An individual is said to be resident, if he satisfies
both of the following conditions:
He has been resident in India in at least 2 out of 10 previous
years immediately preceding the relevant previous year.
He has been in India for a period of 730 days or more during 7
years immediately preceding the relevant previous year.
Residential status
Resident but not ordinarily resident
Who satisfies :
One of the basic condition
But doesn’t satisfy the 2 additional conditions or one of them.
Non-resident
Who satisfies:
None of the basic condition
None of the additional condition
Residential status of others
HUF (Sec.6(2)):
Resident
If KARTA follows the conditions.
If the control and maangement of its affairs is wholly or partly situated in
india.
Firm and association of persons(sec.6(4)):
If the control and maangement of its affairs is wholly or partly situated in
india.
Company (Sec.6(3)):
If the control and maangement of its affairs is wholly situated in india.
INDIAN AND FOREIGN
INCOME
Whether income is received (or Whether income accrues (or Status of the
deemed to be received) in India arises or is deemed to accrue or income
during the relevant year arise) in India during the
relevant year
Yes yes Indian income
yes no Indian income
No yes Indian income
No no foreign income
INCIDENCE OF TAX FOR
DIFFERENT
TAXPAYERS
Resident and Resident but not Non-resident
ordinarily resident Ordinarily in India
in India resident in India
Indian income Taxable in India Taxable in India Taxable in India
Foreign income
If it’s business income & Taxable in India Taxable in India Not Taxable in India
business is controlled
wholly or partly from
India
If it is income from Taxable in India Taxable in India Not Taxable in India
profession which is set up
in India
If it is business income Taxable in India Not Taxable in India Not Taxable in India
and business is controlled
from outside India
If it is income from Taxable in India Not Taxable in India Not Taxable in India
profession which is set up
outside India
Any other foreign Taxable in India Not Not
income (like salary, rent, Taxable in India Taxable in India
interest, etc.)
Any other taxpayer (like company, firm, co-operative society,
association of persons, body of individual, etc
Resident in Non-resident in
India India
Indian income Taxable Taxable
Foreign income Taxable Not taxable
INCOME DEEMED TO
ACCRUE OR ARISE IN INDIA
Nature of income Whether income is
deemed to accrue
or
arise in India
Income from business connection in India
Yes
Income from any property, asset or source of income in India
Yes
Capital gain on transfer of a capital asset situated in India
Yes
Income from salary if service is rendered in India
Yes
Income from salary if service is rendered outside India (not being a
No
case stated below)
Income from salary (not being perquisite/allowance) if service is
Yes
rendered outside India (provided the employer is Government of
India and the employee is a citizen of India)
Dividend paid by the Indian company
Yes
Thankyou
