Accounting and Finance

1. Residential Status

3.  The Residential status of a person is required to be
determined for each assessment year in order to
determine the scope of total income.
 The basis of determination of Residential status in
respect of each person is laid down under the
provisions of section 6 are analysed hereinafter.

4. An individual is said to be resident in India in
any previous year if he fulfills
any one of the following two basic conditions:
 He is in India in that year for a period or periods
amounting in all to 182 days
or
 He is in India for a period or periods amounting in
all to 60 days or more during the previous year and
365 days or more during the 4 years preceding that
previous year

5. Exceptions to 2nd condition
 An individual, who is a citizen of India, leaving India
in any year for the purpose of employment or as a
member of the crew of an Indian ship
 A citizen of India or a person of Indian origin who is
residing outside India and comes to India on a visit
in any previous year

6. Additional conditions for Resident and
Ordinarily Resident sec 6 6(a)
 1. he has been resident in India in at least 2 out
of 10 preceding previous years.
&
 2. he has been in India for 730 days or more during
the 7 preceding previous year.

7. Eg-1
 Steve Waugh, the Australian cricketer comes to India for 100 days every
year. Find out his residential status for the A.Y. 2022-23.
Solution :
For the purpose of his residential status in India for A.Y. 2022-23, the relevant
previous year is 2021-22.
Step 1: The total stay of Steve Waugh in the last 4 years preceding the previous
year is 400 days (i.e.100 × 4) and his stay in the previous year is 100 days.
Therefore, since he has satisfied the second condition in section 6(1), he is a
resident.
Step 2: Since his total stay in India in the last 7 years preceding the previous
year is 700 days (i.e. 100 × 7), he does not satisfy the minimum requirement
of 730 days in 7 years. Any one of the conditions not being satisfied, the
individual is resident but not ordinarily resident.
 Therefore, the residential status of Steve Waugh for the assessment year
2021-22 is resident but not ordinarily resident.

8. Eg-2
 Mr. B, a Canadian citizen, comes to India during the financial
years 2017-18, 2018-19, 2019-20, 2020-21 and 2021-22, he was
in India for 55 days, 60 days, 90 days, 150 days and 70 days
respectively. Determine his residential status for the A.Y. 2022-
23.
 Solution:
 During the previous year 2021-22, Mr. B was in India for 70
days and during the 4 years preceding the previous year, he was
in India for 355 days (i.e. 55+ 60+ 90+ 150 days).
 Thus, he does not satisfy section 6(1). Therefore, he is a non-
resident for the previous year 2021-22

9. Eg- 3
 Mr. C, a Japanese citizen left India after a stay of 10 years on 1.06.2019 During the
financial year 20-21, he comes to India for 46 days. Later, he returns to India for 1
year on 10.10.2021. D-etermine his residential status for the A.Y. 2022-23.
 Solution

10. Eg- 4
 Mr. D, an Indian citizen, leaves India on 22.9.2021 for the first time, to
work as an officer of a company in France. Determine his residential
status for the A.Y. 2022-23.
 Solution
 During the previous year 2017-18, Mr. D, an Indian citizen, was in
India for 175 days (i.e. 30+ 31+ 30+31+ 31+22 days). He does not
satisfy the minimum criteria of 182 days.
 Also, since he is an Indian citizen leaving India for the purposes of
employment, the second condition under section 6(1) is not applicable
to him. Therefore, Mr. D is a non-resident for the A.Y. 2022-23.