categorizing an individual on weather his income be taxed in India on the basis of his residential status.

1. Residential status
Different taxable entitiesSection 6 lays down the test of residence for the following taxable entities:
(a) An individual
(b) A Hindu undivided family
(c) A firm or association of persons or a body of
individuals
(d) A company &
(e) every other person
Different kinds of residential status
Assesses are either (a) Resident in India, or Non-Resident in India. As far as
Resident individuals & HUF are concerned, they can further divided in to two
categories,
i) Resident and ordinarily resident or
ii) Resident but not-ordinarily resident.
All other assesses (viz, a firm, an association of persons, a company and every other
person) can simply be either a resident or a non-resident.
Residential status of an Individual [ sec. 6 ]
An Individual may be (a) Resident and ordinarily resident
(b) Resident but not ordinarily resident
(c) Non-resident
Resident in India [sec. 6(1) ]:
An individual is said to be resident in India in any previous year, if he satisfies any one of
the following basic condition.
1. He is in India in the previous year for a period of 182 days or more.
OR
2. He is in India for a period of 60 days or more in the previous year and 365 days or more
in 4 years immediately preceding the previous Year.
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2. Note:
The period of 60 days in basic condition 2 above is extended to 182 days in case of
a) An Indian citizen who leaves India during the previous year for the purpose of
employment outside India or an Indian citizen who leaves India during the previous year
as a member of the crew of an Indian ship.
b) Indian citizen or a person of Indian origin who comes on a visit to India during the
previous year.
Non-resident: If any of the above conditions are not satisfied an individual is said to be
Non-Resident in India
If an individual is resident in India we can see whether he is
(a) Resident and ordinarily resident, or
(b) Resident but not ordinarily resident
(a) Resident and ordinarily resident [ sec. 6(6) ]: A resident
individual is treated as
resident and ordinarily resident in India if he satisfies the following two additional
condition
1. He has been resident in India in at least 2 out of 10 previous Years immediately
preceding the relevant previous year.
2. He has been in India for a period of 730 days or more during 7 years proceeding the
relevant previous year.
(b) Resident but not ordinarily resident: A resident individual is treated as resident but not
ordinarily resident in India if any one or both the additional conditions are not satisfied.
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3. Residential status-Hindu Undivided Family(HUF), Association Of Persons(AOP)
[section 6(2)]
Resident: A HUF, Firm, or AOP is said to be resident in any previous year
control and management of its affairs is wholly or partly situated in India.
if
Non-Resident : A HUF, Firm, or AOP is non-resident in India if control and
management of its affairs is wholly situated outside India
Resident and Ordinarily Resident (HUF)
If the karta or the Manager of the resident HUF satisfies the additional two conditions
u/s 6(6) as applicable to Individuals, the HUF would be treated as ‘RESIDENT AND
ORDINARILY RESIDENT(HUF)
Resident But Not Ordinarily Resident (HUF)
If the karta or the Manager of the resident HUF does not satisfies both the additional
conditions u/s 6(6) as applicable to Individuals, the HUF would be treated as
‘RESIDENT But Not ORDINARILY RESIDENT(HUF)
Residential status – COMPANY[section 6(3)]
A Company is said to be resident in India in any previous year, if,
a)
It is an Indian company
OR
b)
During that year the control and management of its affairs is situates
Wholly in India
Explanation :
1)
2)
An Indian company is always treated as resident in India.
A foreign company is resident in India only if, during the previous year,
control and management of its affairs is situated Wholly in India
Residential status – Other assesses [section6(4)]
Any other assesses is said to be resident in India in any previous year if the
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4. Control and management of its affairs is wholly or partly situated in India
In other words, it can be states that any other assessee can be treated as non-resident if
the control and management of its affairs are Wholly situated outside India
Note:
In case of firm, AOP, company and other assesses, once such an assessee is is resident
it will automatically become “RESIDENT AND ORDINARILY RESIDENT”.
They need not fulfill any other conditions. Thus the concept of R but NOR does
not exist in above mentioned assessesses.
problems on determination of residential status
1. Mr. Bhardwaj who is an Indian citizen working in London, came on a visit to India on 12 th
December, 2012. Prior to 1st April, 2012 he was in India during 2008-09 to 2011-12.
Determine his Residential status for the assessment year 2013-14.
2. Mr. A, a British national, comes to India for the first time during 2006-07. During the
financial years 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 he is in India for 55days,
60days, 80days, 160days and 70days respectively.
Determine his residential status for the assessment year 2013-14.
3. Mr. Louis Waugh, a cricketer comes to India in every cricketing season for the last six
years. He came to India on 15-10-2012 and left India on 10-01-2013. He was in India for
more then 365 days in the preceding four previous years.
Determine his residential status for the assessment year 2013-14.
4. Mr. peter is a foreign citizen. He visits India every year for a period from 1 st April to 10th
July. Find out his residential residential status for the assessment year 2013-14.
5. Mr. Augustin, a Canadian citizen visits India for the first time on 06-04-2011. He was in
India through out the financial year 2012-2013. Determine his Residential status for the
assessment year 2013-14.
6. Ms Melissa, a Malasian citizen leaves India, after a period of 10 years stay on
01-06-2010, during the financial year 2011-12, she comes to India for a period of 46 days.
Later she returns to India on 10-10-2012. Determine her Residential status for the assessment
year 2013-2014.
7. Pradeep Kumar, an Indian citizen, leaves India for the first time to take up employment in
Kuwait, on September 20, 2010. Thereafter, he came to India, on April 10, 2011 for a visit
and stays up to September 10, 2011. On September 10, 2011, he goes to Kuwait and comes
back on May 10, 2012. He stays India thereafter. Find out his Residential status for the
assessment year 2013-14.
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5. 8. Mr. Rajesh came to India for the first time from America o 1 st oct. 2012. Since the day of his
arrival he stayed at Mumbai till 24th Dec.2012 and thereafter in Goa till 15th April, 20013 when
he left for England. Determine his Residential status for the assessment year 2013-14.
9. Mr. John, an Indian citizen receives appointment as a supervisor in a oil company in
Kuwait. He leaves India, for the first time to rake up the job in Kuwait, on September 28,
2012.
Determine his Residential status for the assessment year 2013-14 .
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