RESIDENTIAL STATUS [SEC.

6]
The test of Basic conditions and additional determine the residential status of an Individual.

BASIC CONDITIONS [U/S 6(1)]

(a) One should be in India during the relevant previous year for a period of 182 days or more. (b) One should be in India for a period of 60 days or more during the relevant previous year AND 365 days or more during 4 years immediately preceding the relevant previous year. Note: The word AND in basic condition (b) Signifies that assessee has to satisfy both parts i.e. 60 days or more during the relevant previous year and 365 days or more during 4 years immediately preceding the relevant previous year.

ADDITIONAL CONITIONS [U/S 6(6)]

(i) A person should be a resident in India for atleast 2 years out of 10 years immediately preceding the relevant previous year.

Note: A person is said to be a resident in India if he satisfies atleast any one of the above mentioned basic conditions U/S 6(1) (ii) He should have stayed in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year. Different Residential Status (i) Resident: An individual is said to be a resident in India if he satisfies atleast any one of the above mentioned two basic conditions U/S 6(1) (a) Ordinary Resident: A Resident is said to be an ordinary Resident if he satisfies both the additional conditions given above U/S 6(6) (b) Not Ordinary Resident: A Resident is said to be a Not Ordinary Resident if he satisfies one or none of the additional conditions given above U/S 6(6) (ii) Non- Resident: An Individual is said to be a non-resident if he satisfies none of the basic conditions and additional conditions being irrelevant.

EXCEPTIONS TO THE RULE OF RESIDENTIAL STATUS:

The period of 60 days mentioned in basic condition (b) U/S 6(1) shall be extended to 182 days in the following situations: (i) An Indian citizen who leaves India during the previous year for the purpose of employment outside India. (ii) An Indian citizen who leaves India during the previous year as a member of crew of Indian ship. (iii) An Indian citizen or a person of Indian origin who comes to India on a visit during the previous year.

Provident fund (PF)

Provident Fund is a form of salary which is for the benefit of assessee after retirement. The mechanism of PF works like this (4 incidences of PF) 1. Every month the employee will be contributing to this fund for his future benefits. 2. Normally the same amount will be contributed by the employer also to the fund 3. Interest will be earned by investing these funds in some good rated securities. 4. Assessee can withdraw this at the time of leaving the job or retirement or death. To promote savings from employees deduction U/S 80C is provided by the Government. Type of PF 1. Statutory PF: Maintained by Government 2. Recognized PF: Recognized by commissioner of Income tax 3. Unrecognized PF: Not recognized by commissioner of IT nor recognized by government. 4. Public Provident Fund: This is available for general public Now let us learn tax treatment for all the four incidence of PF and four types of PF. Particulars Statutory Recognized PF Unrecognized Public PF PF Employees Deduction U/S Deduction U/S No deduction Deduction U/S contribution 80C 80 C 80C Employers Not taxable Upto 12% of Not an Income Exempt contribution salary not taxable. In excess of 12% of salary taxable. Interest on Not taxable Upto 9.5% Not an Income Exempt accumulated Interest- not balance taxable Above 9.5%- Taxable Withdrawal Not taxable More than 5 yrs Employees Exempt (Lumpsum) (Exempt) of continues contribution service exempt exempted less than 5 yrs Interest on of service employees treat as URPF contribution Income from Sources Employers contribution + Interest on this profits in lieu

of salary Salary: Basic Salary (+) Dearness pay (if enters) (+) DA (enters) (+) Commission based on fixed % on turnover achieved by assessee. The amount eligible for deduction U/S 80 C is subjected to the maximum limit of 1,00,000.