- The residential status of an individual or entity determines whether income earned inside or outside India is taxable in India. - There are different residential statuses for individuals/HUFs and other entities like firms. For individuals, the statuses are resident and ordinarily resident, resident but not ordinarily resident, and non-resident. - Determining the residential status involves assessing whether basic or additional conditions are met based on the number of days spent in India in the relevant period. Meeting these conditions establishes whether one is a resident and ordinarily resident, or resident but not ordinarily resident.

1. RESIDENTIAL STATUS and tax incidence

5. HOW TO DETERMINE THE RESIDENTIAL STATUS OF THE INDIVIDUAL

6. If such individual is “Resident” in India, then find out whether he is “ordinarily resident” in India. However, if such individual is a “Non-resident” in India, then no further investigation is necessary. STEP 2 First find out whether such individual is “Resident” in India STEP 1

8. EXCEPTIONS

9. 150 days Indian citizen or a person of Indian origin who comes on a visit to India during the previous year 1990-91 to 1994-95 182 days Indian citizen or a person of Indian origin who comes on a visit to India during the previous year 1995-96 Onwards 182 days 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 1990-91 Onwards EXTENDED PERIOD WHO CAN TAKE THE BENEFIT OF EXTENDED PERIOD ASSESSMENT YEARS

10. CONDITIONS TO TEST AS TO WHEN A RESIDENT INDIVIDUAL IS ORDINARILY RESIDENT IN INDIA Additional Condition 1 He has been resident in India in atleast 2 out of 10 previous years immediately preceding the relevant previous year Additional Condition 2 He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year

11. CONDITIONS TO TEST AS TO WHEN A RESIDENT BUT NOT ORDINARILY RESIDENT [SEC. 6(1), (6) (a)] Case 1 If he satisfies at least one of the basic conditions, but none of the additional conditions Case 2 If he satisfies at least one of the basic conditions “AND” one of the two additional conditions

12. NON - RESIDENT An individual is a Non-Resident in India if he satisfies none of the basic conditions. In the case of non-resident; additional conditions are not relevant .

13. RESIDENTIAL STATUS OF A HUF [SEC 6 (2)]

15. When a Resident HUF is Ordinarily Resident in India Additional Condition (i) Kartha has been resident in India in at least 2 out of 10 previous yrs immediately preceding the relevant previous yrs Additional Condition (ii) Kartha has been present in India for a period of 730 days or more during 7 yrs immediately preceding the relevant previous yrs IF KARTHA OR MANAGER OF RESIDENT HUF DOES NOT SATISFY “ THE TWO” ADDITIONAL CONDITIONS, THE FAMILY IS TREATED AS RESIDENT BUT NOT ORDINARILY A RESIDENT IN INDIA

18. RESIDENTIAL STATUS OF EVERY OTHER PERSON [SEC. 6(4)] Every other person is resident in India if control and management of his affairs is, wholly or partly, situated within India during the relevant previous. On the other hand, every other person is non-resident in India if control and management of its affairs is wholly situated outside India.

20. PROVISIONS IN BRIEF Whether income is received (or deemed to be received) in India during the relevant year Whether income accrues (or arises or is deemed to accrue or arise) in India during the relevant year Status of Income Yes Yes Indian Income Yes No Indian Income No Yes Indian Income No No Foreign Income

21. INCIDENCE OF TAX FOR DIFFERENT TAX PAYERS

22. For INDIVIDUAL and HUF

25. FOR OTHER TAX PAYERS Not taxable in India Taxable in India FOREIGN INCOME Taxable in India Taxable in India INDIAN INCOME NON-RESIDENT IN INDIA RESIDENT IN INDIA

26. CONNOTATION OF RECEIPT OF INCOME

27. Income received in India is taxable in all cases irrespective of residential status of an assessee. The following points are worth mentioning in this respect…

29. CONNOTATION OF INCOME DEEMED TO ACCRUE OR ARISE IN INDIA

31. INCOME FROM BUSINESS CONNECTION [SEC.9(1)(I)]

33. WHAT IS BUSINESS CONNECTION???

34. ACTIVITY ONE He Exercises In India An Authority To Conclude Contracts On Behalf Of The Non Resident.

35. ACTIVITY TWO He Has No Such Authority but Habitually Maintains in India a Stock of Goods or Merchandise From Which He Regularly Delivers Goods or Merchandise on Behalf of the Resident

36. ACTIVITY THREE He Habitually Secures Orders in India for the Non-residenton- Residents Under the Same Management

37. Independent Brokers /Agents are EXCLUDED

38. Operations not taken as BUSINESS CONNECTION???

40. OTHER IMPORTANT POINTS TO BE NOTED

44. CONCLUSION…….

46. TAX AUTHORITIES BEHIND TAX EVADING ASSESSEES