CS Notes- Income Tax | RESIDENTIAL STATUS

1. Section 6(1): An Individual can be resident or a non resident in India. To be a resident he has to satisfy one of the following conditions:

1. Stay in India >/= 182 days in a PY OR

2. Stay in India >/= 60 days in a PY and Stay in India >/= 365 days in preceeding 4 PYs.

II) For the b) condition above, we have 3 exceptional cases. In all these 3 cases 60 days shall be taken as 182 days:

1. A citizen of India who leaves India for the employment purposes.

2. A citizen of India who leaves India as a member of crew of Indian ship.

3. An Individual who is a citizen of India OR is a person of Indian origin who comes to India on a visit.

III) Section 6(6)(a): A Resident individual can be ROR or NOR. ROR is one who satisfies both of the following conditions

1. Resident in 2/10 preceeding PYs.

2. Stay in India >/= 730 days in a 7 preceding PYs.


IV) For an individual, residential status is determined based on the period of stay in India. However, for HUF, Firm, AOP and other non-corporate entities the control and management is critical in determining residential status.


V) While determining residential status of HUF period of stay of karta is not at all relevant. What is important is whether control and management of such HUF is situated in India or not. Further to check whether HUF is ROR or NOR residential status of karta as an individual becomes relevant.


VI) An Indian company is always regarded as a Domestic Company. A company incorporated outside India may also be treated as a domestic company if certain conditions are fulfilled.


VII) An Indian company is always a resident. A Company incorporated outside India is treated as `resident’ only if control and management is wholly in India.


VIII) Resident and ordinarily resident is taxed on his global income.


IX) Not ordinarily resident is taxed in respect of Indian Income. In respect of foreign income he is taxed only if it is from business controlled in India or profession set up in India.


X) Non resident is taxed in respect of Indian Incomes only.


XI) Remittance in India is never taxed in India, since it is the second receipt.


XII) Agriculture income from a land in India is always exempt from tax. However, if land is not in India then agriculture income will be taxed in India.


XIII) Dividend from Domestic Company is not taxed but from foreign company it is fully chargeable to tax. Dividends from cooperative societies are fully taxable.