PRINCIPLES OF

TAXATION PROJECT

In the Partial Fulfilment for the Requirement of the Project on the

Subject of Principles of Taxation of B.A L.L.B 5 year course 3rd

Semester

Submitted To: Submitted By:

Mrs. Puja Jaiswal Aditya Karan Saksena

(1507)
 ACKNOWLEDGMENT

THANK YOU IS THE BEST PRAYER THAT ANYONE CAN SAY

I have been taught the subject of Labour Law by Mrs Puja Jaiswal who
helped me all through in the accomplishment of this project. I would like to take
this opportunity to thank her for her invaluable contribution in my research on
Health and Welfare of Workers. She not only provided me a platform to
compile this project but also guided me at all levels.

I also thank the members of the library staff and computer section for the
cooperation in making available the books and accessing the internet.

Along with them I would also like to thank the members of Research Cell
Society and my friends who helped me with other tiny details.

Aditya Karan Saksena

 RESIDENTIAL STATUS FOR TAX
PURPOSES
The residential status of a person is required to be determined for each
assessment year in order to determine the scope of total income. The basis of
determination of residential status in respect of each person is laid down under
the provisions of section 6 of the Income Tax Act, 1961.

Residential status of an individual for income-tax purposes depends on the

physical stay of the individual in India. Based on the period of stay in India in a
given financial year, an individual may be classified as:

 Resident
 Not ordinarily resident (NOR)
 Non-resident (NR).

A. An individual is a resident in India if he stays in India for:

 At least 182 days during a financial year

 At least 60 days during a financial year and 365 days or more during the
4 years preceding that fiscal year.

Exceptions to the above:

 The 60-day period mentioned above will be substituted for 182 days in
case of the following persons:-
 A citizen of India who leaves the country as a crew member of an
Indian ship or for the purposes of employment outside India
 A Citizen of India or PIO who visits India in any previous year.

B. An individual is an NOR in India if:

 He is an NR in India in 9 of 10 financial years preceding the relevant

fiscal year
 His stay in the 7 years preceding the relevant financial year is in the
aggregate 729 days or less.

C. An individual is an NR in India if:

 He does not satisfy any of the two conditions mentioned in A above.

Non-Resident Indian (NRI)

An NRI is defined as a citizen of India or a PIO who is not a resident.

Person of Indian Origin (PIO)

A person shall be deemed to be of Indian origin if he or either of his parents or

grandparents were born in an undivided India.

Residential Status of HUF – Sec 6(2)

A HUF is said to be resident in India when during that year control and
management is situated wholly or partly in India. In other words it will be non-
resident in India if no part of the control and management of affairs is situated
in India.

Control and management lies at the place where decision regarding the affairs
of the HUF are taken.

A resident HUF is said to be resident and ordinarily resident in India if the karta
of the HUF satisfies both the following conditions:

i. He has been resident in India for at least 2 out of 10 previous years

immediately preceding the relevant previous year

And

ii. He has been in India for 730 days or more during 7 previous years
immediately preceding the relevant previous year.

If the karta of HUF does not satisfy any or both of the above conditions, then
HUF shall be resident but not ordinarily resident in India.

Residential Status of Firms, AOP, BOI etc – Sec 6(2), 6(4)

A Firm, AOP, BOI etc is said to be resident in India when during that year
control and management is situated wholly or partly in India. In other words it
will be non-resident in India if no part of the control and management of affairs
is situated in India.

Control and management lies at the place where decision regarding the affairs
of the firms etc are taken.

Residential Status of Companies – Sec 6(3)

Indian Company is always resident in India

Foreign Company is resident in India if control and management of its affairs
is situated wholly in India during relevant previous year i.e. if all the board
meetings of the foreign company is held in India, then it shall be resident,
otherwise non-resident.