The document explains the significance of an individual's residential status in determining tax liability in India, detailing how income earned abroad or in India is taxed based on residency rather than citizenship. It outlines different residential statuses: ordinary resident, not ordinary resident, and non-resident, along with specific conditions related to the number of days spent in India over selected previous years. The basic and additional conditions that differentiate these statuses are also summarized.

1. Residence and tax liability
Income tax
Presented By: Leena Gauraha
Guided By: Gayatri Iyenger
M.Com Ist Semester
Vivekanand Mahavidyalaya

2. Introduction
• Tax Incidence on an
assessee depends on his
residential status.
• For Instance, whether an
income, accrued for an
individual outside India, is
taxable in India depends
upon the residential
status of the individual in
India.

3. • Similarly, whether an income earned by a foreign
national in India (or outside India) is taxable in India,
depends upon the residential status of the individual,
rather than on the citizenship.
Therefore, the determination of the residential status of a person is very
significant in order to find out his liability.

4. Different Residential status
•Ordinary Resident
•Not- Ordinary Resident
•Non- Resident
Resident

5. Assessment year
Sec. 2 (9)
• This means the year
commencing on the first day
of April every year and
ending 31st march of the next
year and Assessee is liable to
pay tax on the income of
previous year.
Previous year
Sec. 3
• Income earned in a year is
taxable in the next year.The
year in which income is
earned is known as previous
year and the next year in
which income is taxable is
known as Assessment year.

6. Residential status: Sec. 6 (1)
• Residential status is determined for every previous year. It
depends on the number of days a person is in India during
the concerned previous year.
Basic Conditions
182 days (or) more in the PY
(2017-18)
60 days (or) more in the PY
(2017-18)
Or
AND
4 PPYS
2016-2017
2015-2016
2014-2015
2013-2014

7. Additional conditions [Sec. 6(6)(a)]
• To test as to when a resident individual is ordinary resident in
India or not.
Additional Conditions
Resident in India Stayed in India
At least 2 out of 10 PPYS
&
730 days or more in the 7
PPYS
7 PPYS= 2016-17 to 2010-11
This means that the Assessee must have satisfied at least one of the basic
conditions for 2 years out of 10 PPYS.

8. Conditions to be satisfied
• Resident- Satisfies any one of the basic conditions.
• Ordinary Resident- Satisfies any one of the basic
conditions and both of the additional conditions.
• Not Ordinary Resident- Satisfies any one of the basic
conditions but does not satisfies one or none of the
additional conditions.
• Non Resident- Does not satisfies any of the conditions

9. Residential Status in nutshell