RESIDENTIAL STATUS
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PERSON
Residential Status
Legal Status
Legal Status
1.
2.
3.
4.
5.
6.
7.
8.
Individual
Firm
Companies
Institution
Local authorities
H.U.F
A.O.P
B.O.I
Resident
Resident & Ordinarily
Resident
Non Resident
Resident but
not Ordinarily
Resident
RESIDENTIAL STATUS: SEC. 6 (1)
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After determining the legal status of an Assessee u/s. 2 (31)
the Residential Status of an Assessee is to be determined.
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1. Determined of every PREVIOUS YEAR:
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.
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2. Different terms of Citizenship
An Individual may be a Citizen of Britain, but a resident in
India. In the same way a Citizen of India may be a non-resident
of India.
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3. Residential Status is important in deciding whether
Foreign Income of a person is Taxable or not.
TEST OF RESIDENCE
1.
For an INDIVIDUAL
Basic 2 conditions
An Individual is said to be resident when he satisfies any one
of the basic 2 conditions.
1.
He must be in India for 182 days or more in that relevant
pervious year.
OR
2.
a.
He must be in India for 365 days or more during 4
previous year immediately preceeding the relevant previous year.
AND
b.
He must be in India during that relevant previous year
for a period of 60 day or more.
EXCEPTION:
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FOLLOWING ARE THE TWO EXCEPTIONS TO RULE OF STAY IN INDIA FOR A PERIOD
OF 60 DAYS IN THE SECOND CONDITION ABOVE.
1.
If a citizen of India or a member of a crew of an Indian ship leaves India in
the previous year for the purpose of employment then he becomes resident if the
60 days are replaced by 182 days.
Employment : Self Employment
Salaried Employed
Professional
Non-professional
i.e. he becomes resident only if he stays in India for 182 days or more and not 60
days or more.
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2. A citizen of India or a person of Indian Origin staying outside India, come on a visit
to India in the previous year, then the 60 days must be replaced by 182 days.
i.e. he become resident only if he stay’s in India for 182 days and not 60 days.
Note: A person is deemed to be of an Indian origin, if he or his parents or any of his
grand parents were born in Undivided
FOR CURRENT ASSESSMENT YEAR
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An Individual will become a resident in India in the P.Y. 20062007 i.e. for current assessment year 2007-2008 if he
satisfies any one of the following 2 basic conditions.
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1. He is in India for 182 days or more in the previous year
2006-2007.
OR
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2. He is in India for 365 days or more during the period
1.04.2002 to 31.03.2006
AND
He is in India for 60 days or more in the pervious year 20062007.
RESIDENT & ORDINARILY RESIDENT - SEC 6 (6)
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If an Individual satisfies the test of Resident then further 2 tests are to be
made i.e. If an Individual is a Resident in India, he may be either Resident
and Ordinarily Resident or Resident but not ordinarily resident.
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An Individual may be Resident and Ordinarily Resident if he satisfies
following 2 conditions.
1. He has been resident in India for at least 2 out of 10 years
immediately preceeding the previous year.
AND
2. He has been present in India for a period of 730 days or more during 7
years immediately preceding the previous year.
If both the above conditions are satisfied then the Individual is Resident and
Ordinarily Resident. But if the additional 2 tests are not satisfied by an
Individual then he is said to be Resident but not Ordinarily Resident.