income tax - residential status of a firm, huf and a company

1. RESIDENTIAL STATUS OF A FIRM,
HUF AND A COMPANY

2. RESIDENTIAL STATUS
1. Residential status is a term coined under Income
Tax Act and has nothing to do with nationality or
domicile of a person.
. Indian who is a citizen of India can be non-resident
for Income tax purposes.
.An American who is a citizen of America can be
resident of India for Income tax purposes.
2. Residential status of a person depends upon the
territorial connection of the person with this country,
i.e., how many days he has physically stayed in India.

3. RESIDENTIAL STATUS OF A FIRM OR
AN ASSOCIATION OF PERSON
Residential status of a firm and an association of a
person defined under section 6 (4) of the income
tax act, 1961.
1. RESIDENT :- A partnership firm or an association
of person is said to be resident in India if the
control and management of its affairs are wholly
or partly situated within India during the
relevant previous year.
2. NON RESIDENT :- It is treated as non resident in
India if the control and management of its
affairs are situated wholly outside India.

4. HUF (HINDU UNDIVIDED
FAMILY)
The Hindu Undivided family can be defined as a
family that consists of a common ancestor and all his
lineal male descendants and their wives and
unmarried daughters.
. The person who manages the affairs of the family is
known as the karta.
. Karta is himself an individual and all the rules will be
applied to him.
. Karta has unlimited liability and all the other
members have limited liability.

5. RESIDENTIAL STATUS OF HUF (Hindu
Undivided Family)
Residential
status of HUF
[section 6 (2)
RESIDENT
ORDINARY
RESIDENT
NOT
ORDINARILY
RESIDENT
NON
RESIDENT

6. RESIDENTIAL STATUS OF HUF
RESIDENT:- HUF is said to be resident in every case except
where during that year of control and management of its
affairs is situated wholly outside India. It means that if a HUF
is controlled from India even partially it will be a resident
assessee.
ORDINARY RESIDENT:-
HUF is said to be ordinary resident if karta fulfills both of the
following conditions:
1. Karta has been a resident in India for at least 2 previous
years relevant to current previous year; and
2. Karta has been in India for 730 days or more during 7
previous years preceding the relevant previous year.

7. RESIDENTIAL STATUS OF HUF
NOT ORDINARILY RESIDENT:-
A HUF will be ‘not ordinary resident’ if:
1. Karta has not been resident in India in at least 2
previous years out of 10 previous years preceding the
relevant accounting year;
OR
2. Karta had not, during the seven previous year
preceding the relevant previous year been present in
India for a period amounting it all to 730 days.
NON RESIDENT:- HUF, shall be non resident in India if the
control and management of affairs is situated wholly
outside India.

8. RESIDENTIAL STATUS OF A COMPANY
The residential status of a company is to be determined on
the basis of its incorporation or registration.
1. RESIDENT [section 6 (3)]
A company shall be said to be resident in India, in any
previous year, if
(a) It is an Indian company; or
(b) Its place of effective management, at any time in that
year, is in India.
2. NON RESIDENT [sec 2 (30)]
A company whose place of effective management is situated
wholly outside India, will be non resident company.