Residential Status &

Scope of Total Income

Problem

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 Individual – u/s 6(1)
Residential Status

Resident of India Non Resident of India

BASIC CONDITIONS :-
1. Residing 182 days or more in india during previous year.
OR
2. A) Residing 60 days or more in india during previous year.
AND
B) Residing 365 days or more in india during 4 preceding previous year.

Exception to sec 6(1) :-

1. Indian citizen leaves india during previous year
a) for employment outside india (for taking/purpose of employment)
OR
b) as a member of shipping crew.
2. Person of indian origin , residing outside, visits india during previous year.
In the above given two cases only 1st Basic condition is applicable and not the 2nd Basic condition.
 Residential Status – u/s 6(6)

Resident of India Non Resident of India

Resident and Ordinarily Resident Resident but not Ordinarily Resident

ADDITIONAL CONDITION :-

1. Residing 730 days or more in india during 7 preceding previous year.

AND
2. Must be a resident of india in at least 2 out 10 preceding previous year.

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Steps to calculate residential status of Individual

1.Introduction
2.Basic Condition
3.Calculation
4.Explanation of 3rd step
5.New Paragraph
6.Additional Condition
7.Calculation
8.Explanation of 7th step
9.Conclusion

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Note (for Individual):

• In case of Non resident of India ignore step no 5 to step no 8.

• The day of arrival to India and the day of departure from India is to be
considered in India.

• A person may be resident in two (or more) countries at the same time.

• It is not essential that the stay should be at the same place.

• It is equally not necessary that the stay should be continuous.

• The place of stay or the purpose of stay is not material.

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Mr. X a foreign citizen, comes to India during the previous year 2015-16 and stays here for
90 days. Determine his residential status for the assessment year 2016-17, after
considering his stay in India in past years.

Pr. Yr No. of days Pr. Yr No. of days

2001-02 88 2008-09 18
2002-03 310 2009-10 355
2003-04 12 2010-11 307
2004-05 6 2011-12 180
2005-06 68 2012-13 72
2006-07 181 2013-14 14
2007-08 365 2014-15 125

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Ans:
1.Introduction
Mr. X is a foreign citizen, hence exception to section 6(1) is not applicable to him.
Therefore to become resident of india he can satisfy any one of the following given two basic
conditions.

2.Basic Conditions
a.Residing 182 days or more in india during previous year OR
b.Residing 60 days or more in india during previous year AND
Residing 365 days or more in india during 4 preceding previous year

3.Calculation
PY 2015-16
No of days in india = 90 (less than 182 days)

PPY No of days in India

2014-15 125
2013-14 14
2012-13 72
2011-12 180
Total 391
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4. Explanation
Mr. X was in india for only 90 days (which is more than 60 days) during the previous
year 2015-16 and 391 days (which is more than 365 days) during 4 preceding
previous year. As he satisfies both the part of 2nd basic condition, he became resident
of india.

5. New Paragraph
As he becomes resident of india now further we have analyse whether he is resident
and ordinarily resident or resident but not ordinarily resident. To become resident and
ordinarily resident he has to satisfy the following given 2 additional conditions.

6. Additional Conditions
a. Residing 730 days or more in india during 7 preceding previous year AND
b. Must be a resident of india in at least 2 / 10 preceding previous year.

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 7. Calculation

PPY No of days stay in india Residential Status

2014-15 125 RI
2013-14 14 NRI
2012-13 72 RI
2011-12 180 RI
2010-11 307 RI
2009-10 355 RI
2008-09 18 NRI
1,071
2007-08 365 RI
2006-07 181 RI
2005-06 68 RI

8. Explanation
Mr. X was in india for 1,071 days(which is more than 730 days) during 7 preceding previous year and
was resident of india for 8/10 preceding previous year. Thus he satisfies both the additional condition of
730 days or more and 2/10.

9. Conclusion
Mr. X is resident and Ordinarily resident of india (R&OR)
 Hindu Undivided Family – u/s 6(2)

Residential status

Control and Management

Fully or Partly in India Fully outside India

Resident of India Non Resident of India

Ordinary Status
Resident and Ordinarily Resident – 730/7 & 2/10
Karta
Resident but not Ordinarily Resident – 729/7 & 1/10
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 Company – u/s 6(3)
Residential Status

Registered in India Registered outside India

Foreign Company
Indian Company

Always Resident of India Control & Management

Once Resident of India Fully in India Fully or Partly Outside India

always Resident &
Ordinarily Resident Always Resident of India Non Resident of India

Once Resident of India

always Resident &
Ordinarily Resident
 Firm,Association of person/Body of Individual,Local Authority,Artificial
Juridical Person u/s 6(4)

Residential status

Control & management

Fully or partly In India Fully outside India

Non Resident of India

Resident of India

Resident & Ordinarily Resident

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 Scope of Income u/s 5
INCOME R.&.O.R. R.B.N.O.R. N.R.I.

A- Indian Income :-
1. Income received in India Taxable Taxable Taxable

2. Income deemed to be received India Taxable Taxable Taxable

3. Income accrued in India Taxable Taxable Taxable
`
4. Income deemed to be accrued in India Taxable Taxable Taxable
B- Foreign Income :-
From a business which is controlled & managed
1. With in India Taxable Taxable Not
Taxable
2. Outside India Taxable Not Not
Taxable Taxable
 Mr. Vilas, a foreign national, furnishes the following particulars of his income for the previous
year relevant to Assessment Year 2016-17.
1. Profit on sale of plant at London Rs. 46,000/- (half is received in India).
2. Profit on sale at Delhi Rs. 52,000/- (half is received in London).
3. Interest on U.K. Development Bonds Rs. 40,000/- (entire amount received in London).
4. Interest on Bank Accounts in India Rs. 5,000/-.
5. Dividend from British Company received in India Rs.2,000/-.
6. Income from property in London Rs.3,000/-.
7. Interest received in London from a company registered in India but mainly operating in U.K. Rs.
18,000/-.
8. Profit from a business in Delhi managed from India Rs.30,000/-.
9. Income from a business in Ceylon controlled from India Rs.10,000/-
10. Rental income from a property in Nepal deposited by a tenant in a foreign branch of an Indian
Bank operating there Rs.25,000/-.
11. Salary earned and received in Hong Kong Rs.19,000/-.

Determine gross total income of Mr. Vilas for the assessment year 2016-17 if he is (i) Resident and
ordinarily resident; (ii) Resident but not ordinarily resident & (iii) Non-Resident.

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 Solution:
Gross total income of Mr. Vilas will be different according to different residential status while
citizenship of Mr. Vilas is immaterial.

Particular R & OR RBNOR NRI

1. Profit on sale of plant at London:

a. Received in India (46,000 x ½) 23,000 23,000 23,000
b. Received outside India (46,000 x ½) 23,000 --------- ---------
2. Profit on sale of plant at Delhi. 52,000 52,000 52,000
3. Interest on U.K. Development Bonds. 40,000 --------- ---------
4. Interest on Bank Accounts in India 5,000 5,000 5,000
5. Dividend from British Company received in India. 2,000 2,000 2,000
6. Income from property in London. 3,000 ------- -------
7. Interest received in London from a company registered in India. 18,000 18,000 18,000
8. Profit from a business in Delhi managed from India. 30,000 30,000 30,000
9. Income from a business in Ceylon controlled from India. 10,000 10,000 ---------
10. Rental income from a property in Nepal deposited by a tenant in
a foreign branch of a Indian Bank operating there. 25,000 --------- ---------
11. Salary earned and received in Hong Kong. 19,000 --------- ---------
TOTAL 2,50,000 1,40,000 1,30,000

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 Deemed income u/s 41 {SALARIES}
SALARIES

Employed and Employed abroad by Employed by foreign company

paid in India Indian employer for services outside India &
paid abroad
whether by Indian
Paid in India Paid abroad Taxable only in the
or foreign employer
hand of Resident &
ordinary resident
Taxable R&OR
NRI NRI
in RBNOR R&OR RBNOR
India

Taxable Not
in Taxable in
India India
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Thank You!

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