Tax is levied on the total income of an assessee under the provisions of Income Tax Law, 1961 and the tax liability of an assessee is dependent on his/her residential status and their stay in India during the previous years. In this article / PPT we'll discuss how a person becomes the Resident / Ordinary Resident / Not Ordinary Resident / Non Resident of India under Section 6 of Income Tax Law, 1961.

1. RESIDENTIAL
STATUS AND
INCIDENCE OF TAX Presented By:
MAMTA BHOLA
[M.Com (Business Innovations), B.Ed, UGC-NET]
(Assistant Professor, Department of Commerce and
Management, Arya College Girls Section, Ludhiana)
Subject: Income Tax Law [B.Com III (5th Semester)]

2. How will you determine
the residential status of
an assessee?

3. Citizen
Resident

4. Assessment Year 2021-22
Relevant Previous Year 2020-21
• Previous years preceding the relevant previous years will be
1. 2019-20
2. 2018-19
3. 2017-18
4. 2016-17
5. 2015-16
6. 2014-15
7. 2013-14
8. 2012-13
9. 2011-12
10.2010-11

5. Residential Status of
Individual Assessee
Resident
[Section 6(1)]
Ordinary
Resident
Not-
Ordinary-
Resident
Non Resident
[Section 2(30)]

6. Resident [Section 6(1)]
One of the following conditions should be fulfilled by an individual
assessee to become the Resident of India for any Assessment Year:
• He must stay in India for the period of 182 days or more
during the relevant previous year.
Or
• He must stay in India for the period of 365 days during the 4
previous years preceding to relevant previous year and 60
days during the relevant previous year.

7. ORDINARY RESIDENT
• He must be the resident of India for 2 out of 10 previous
years preceding to relevant previous year.
And
• He must stay in India for the period of 730 days or more
during the 7 previous years preceding to relevant
previous year.

8. NOT ORDINARY RESIDENT
• He was non resident of India for 9 out of 10 previous
years preceding to relevant previous year.
OR
• He must stayed in India for the period of 729 days or
less during the 7 previous years preceding to relevant
previous year.

9. NON RESIDENT [Section 2(30)]
When assessee has not fulfilled any condition of
section 6(1) then he becomes the non resident of
India for that previous year.

10. Q. Mr. Ram, an Indian citizen leaves India for the first time on 31st May, 2015 and comes back on 15th May, 2018. he again leaves India on 10th June, 2019
to come back on 14th January, 2020. He is living in India since then. Determine his residential status for the previous year 2019-20.
• Previous Year 2019-20 (1-4-2019 to 31-3-2020) Assessment Year 2020-21
• Stay in India in Previous Year
From 1-4-2019 to 10-6-2019 71 days
From 14-1-2020 to 31-3-2020 78 days
Total 149 days
Test a) Section 6(1) is not fulfilled i.e. 182 days or more. (Not fulfilled)
Test b) i.e. 60 days in relevant previous year and 365 days in 4 previous years
preceeding the relevant previous year. (Fulfilled)
2018-19 (15-5-2018 to 31-3-2019) 322 days
2017-18 not in India
2016-17 not in India
2015-16 1-4-2015 to 31-5-2015 61 days
Total 383 days

11. Residential Status
• He is resident as he fulfills the 2nd condition of section 6(1)
• He becomes the ordinary resident
As
He is resident of India for more than 2 years in the previous years preceeding
the relevant previous year
And
He was living India for more than 730 days in India during 7 previous years
Preceeding the relevant previous year.

12. Residential Status of HUF
Resident
[Section 6(2)]
Ordinary
Resident
Not-
Ordinary-
Resident
Non Resident
[Section 2(30)]

13. Resident [Section 6(2)]
Resident (HUF) = Control and
management of affairs in India (wholly
or partially)

14. ORDINARY
RESIDENT
• Karta must be the resident of
India for 2 out of 10 previous
years preceding to relevant
previous year.
And
• Karta must stay in India for the
period of 730 days or more during
the 7 previous years preceding to
relevant previous year.
NOT ORDINARY
RESIDENT
• Karta was non resident of India for 9
out of 10 previous years preceding to
relevant previous year.
OR
• Karta must stayed in India for the
period of 729 days or less during the 7
previous years preceding to relevant
previous year.

15. NON RESIDENT [Section 2(30)]
HUF shall be non-resident in India if the control
and management of affairs is situated wholly
outside India.

16. Residential Status
of Company
Resident
[Section 6(3)]
Non Resident
[Section
2(30)]

17. Resident [Section 6(3)]
a. It is an Indian company.
b. Its place of effective management in that year, is in India.

18. INCIDENCE OF TAX
Different Kinds of Incomes Resident /
Ordinary
Resident
Not Ordinary
Resident
Non-Resident
1. Income received or deemed to be received in India Taxable Taxable Taxable
2. Income earned in India whether received in or outside
India
Taxable Taxable Taxable
3. Income earned and received outside India from a
business controlled or profession set-up in India. Income
may or may not be remitted to India
Taxable Taxable Not
4. Income earned or received outside India from a business
controlled or profession set up outside India
Taxable Not Not
5. Income earned and received outside India from any
other source (Except income under point 3)
Taxable Not Not
6. Income earned and received outside India in the years
preceeding the previous year and if the same is remitted to
India during current previous year
Not Not Not

19. THANK YOU.