RESIDENTIAL STATUS

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 RESIDENTIAL STATUS
• Residential status of an assessee determines the scope of chargeability of his
income

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 REMEMBER
• Residential status is for a Previous Year
• It is year specific and not income specific
• Citizenship and Residential status are two different things

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 DETERMINATION OF RESIDENTIAL
STATUS- INDIVIDUAL

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 RESIDENT IN INDIA
He / She satisfies ANY ONE of the following BASIC conditions –
i) He is in India in the previous year for a period of 182 days or more [Sec.
6(1)(a)]; or

ii) He is in India for a period of 60 days or more during the previous year and for
365 or more days during 4 previous years immediately preceding the relevant
previous year [Sec. 6(1)(c)]

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 NON-RESIDENT IN INDIA
• An assessee who is not satisfying sec. 6(1) shall be treated as a non-resident
in India for the relevant previous year.

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 POINTS TO BE NOTED

• > Date of arrival and departure shall be included for calculation

• > Days of stay need not be continuous and in his/her place of

living or business

• > Staying in territorial waters of India constitute stay in India

• > Citizenship and residential status are not connected

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 EXCEPTIONS
• > following individuals will be treated as residents only if their period of stay is
at least 182 days in the previous year, though they stay in the 4 preceding
previous years they stay for more than 365 days.

1. Indian citizen leaving India as a member of crew of an Indian ship or for the
purposes of employment OR

2. Indian Citizen or Person of Indian Origin who being outside India comes on a
visit to India during the previous year

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 EXCEPTIONS CONTD..

• However such a person having a total income other than foreign income of
exceeding Rs 15 Lakhs during the previous year will be treated as Resident if

A) period of stay in the relevant previous year amounts to 182 days or more

B) He/ she has been in India during the 4 years immediately preceding the
previous year for a total period of 365 days or more AND has been in India for
at least 120 days in the previous year.

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 DEEMED RESIDENT SEC 6(1A)
• An Individual being an Indian citizen having a total income
other than foreign sources exceeding 15 Lakhs during the
previous year would be deemed to be a resident in India if
he/she is not liable to tax in any other country due to his
domicile or residence or any other rules applicable.

• Note : Foreign income does not include income from a business controlled or a
profession setup in India and it also does not include incomes deemed to accrue or
arise in India

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 EXAMPLE
• Mr. Sam came to India first time during the P.Y. 2021-22. During the previous
year, he stayed in India for
(i) 50 days;
(ii) 183 days;
(iii) 153 days.
• Determine his residential status for the A.Y. 2022-23.
1) Non resident
2) Resident
3) Non resident

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 EXAMPLE2
• Andy, a British national, comes to India for the first time during 2017-18.
During the financial years 2017-18,2018-19, 2019- 20, 2020-21 and 2021-22,
he was in India for 55 days, 60 days, 80 days, 160 days and 70 days
respectively.
• Determine his residential status for the assessment year 2022-23.

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 ANSWER
• During the previous year 2021-22, Andy was in India for 70 days & during 4
years immediately preceding the previous year, he was in India for 355 days
• Thus, he does not satisfy Sec.6(1) & consequently, he is a non-resident in
India for the P.Y. 2021-22.

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 EXAMPLE
• E.g. X has her business in India. During the previous year 2021-22, she visited
Japan for purchasing raw-material for her business, from there she went to
USA for attending a business meeting.

• Since, X was outside India in connection with her business/Employment in

India,
• she is not covered by the exception

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 PERSON OF INDIAN ORIGIN
• # Person of Indian origin: A person is deemed to be of Indian origin if he or
either of his parents or grand parents were born in undivided India.

• Grand parents may be paternal or maternal.

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 EXAMPLE
• Miss Anchal, an Indian citizen, left India for first time on 1st April, 2021 for
joining job in Tokyo.
• She came to India on 11th October, 2021 for only 190 days.
• Determine her residential status for P.Y. 2021-22.

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 ANSWER
• Since she left India for employment purpose, hence for becoming resident
she has to stay in India for at least 182 days.
• She was in India for only 173 days during the previous year,
• she is a non-resident for the P.Y. 2021-22.

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 ADDITIONAL CONDITIONS TO TEST WHETHER
RESIDENT INDIVIDUAL IS ‘ORDINARILY RESIDENT
OR NOT’ [SEC. 6(6)]
• If a resident individual satisfies the following additional
conditions, he will be treated as resident & ordinarily
resident in India –
a) He has been resident in India [as per sec. 6(1)] in at least 2
out of 10 previous years immediately preceding the relevant
previous year; And
b) He has resided in India for a period of 730 days or more
during 7 previous years immediately preceding the relevant
previous year.

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 ALWAYS NOT ORDINARY RESIDENT
a) Indian citizen or PIO having income excluding foreign
income exceeding 15 lakhs comes on a visit to India and
stays for more than 120 days but stays less than 182 days
b) A deemed resident u/s 6(1A) is always a resident but not
ordinary resident

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 RESIDENT BUT NOT ORDINARILY
RESIDENT
• If a resident individual does not satisfy both additional
conditions as given u/s 6(6)

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 PROBLEM
• Mr. X, aged 19 years, left India for first time on May 31, 2021. Determine his
residential status for the previous year 2021-22 if:
• i) He left India for employment purpose
• ii) He left India on world tour.

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 ANSWER
• During the previous year 2021-22, X stayed in India for 61 days.
• he was in India for more than 365 days during 4 years immediately
preceding the relevant previous year (as he left India for first time).

• Situation 1. Since he left India for employment purpose, condition of sec.

6(1)(c) shall not be applicable.
• Mr. X is a non-resident in India for the previous year 2021-22.

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 CASE II
• Since he left India on world tour, which is not an exception of sec. 6(1),
satisfaction of any one condition of sec. 6(1) makes him resident in India for
the previous year 2021-22.
• He satisfies 2nd condition of sec. 6(1) , he is resident in India.
• He also satisfies additional conditions specified u/s 6(6).
• He is an ordinarily resident for the previous year 2021-22.

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 INCIDENCE OF TAX

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 INCOME RECEIVED IN INDIA
• where the recipient gets the money (on first occasion)
under his control, is in India,

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 EXAMPLE
• Example: Mr. X, a non-resident, received dividend from an Italian company
in Japan on 15/12/2020. On 17/12/2020 he remitted such income in India.
• Such income shall not be taxable in India as income has neither received in
India nor accrued in India.

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