Residential Status of Assesses & Tax Liability

1. Residential Status of Assesses &
Tax Liability
Presentation By-
Megha Tomar
Priyanka Joliya
Riya Modi

2. Residential Status
The residential status of a person under the Indian
tax laws is governed by section 6 of the Income Tax
Act, 1961. For purpose of taxability of a person’s
income, a person can be a Ordinarily Resident, Not
Ordinarily Resident and Non Resident.

3. Rules for the determination of an
assessee’s residential status-
(A)Basic Condition- A person who stayed at least 182 days or more in
India during the previous year.
OR
He has been in India for at least 365 days during the 4 years preceding the
previous year and is in India for at least 60 days during the previous year.
(B) Additional Condition- He must be resident in India at least two
years out of 10 previous year preceding the relevant previous year.
OR
He has been in India for at least 730 days in all during the 7 previous years
preceding the relevant previous year.

4. Exceptions for 2nd basic conditions-
 If an individual who is citizen of India and leaves India in
any previous year for the purpose of employment or as a
member of a crew of an Indian ship must have stayed in
India for at least 182 days during the previous year instead
of 60 days.
 If citizen of India, who is living outside India comes on a
visit to India in the previous year, He must have stayed in
India for at least 182 days during the previous year instead
of 60 days.

5. TYPES OF RESIDENTS
An Individual
A Hindu
Undivided
Family
A Firm
/Association
of person
Company

6. An Individual
(i) Ordinarily Resident- A person who fulfills both the basic &
additional condition is called ordinarily resident in India.
(ii) Not Ordinarily Resident- A person who fulfills the basic
condition but fail to fulfill the additional condition is called not
ordinarily resident.
(iii) Non Resident- A person who fail to fulfill basic condition
whether he fulfills additional condition or not is called non resident.

7. A Hindu Undivided Family
(i) Ordinarily Resident- If the control & management of this is
situated in India during the relevant previous year, then these are
called ordinarily resident.
(ii) Not Ordinarily Resident- If the ‘KARTA’ of this family is
not ordinarily resident then they are called not ordinarily resident
in India.
(iii) Non Resident- If the control & management of this is
situated wholely outside India then they are called non resident in
India.

8. A Firm/ Associated Of Person
(i) Ordinarily Resident- If the control & management of these is
situated in India during the relevant previous year, then these are
called ordinarily resident in India.
(ii) Not Ordinarily Resident- These can not be not ordinarily
resident.
(iii) Non Resident- If the control & management of these is
wholely situated outside India then these are called non resident in
India.

9. A Company
(i) Ordinarily Resident- A company is called ordinarily
resident in India if it is an Indian company or its control &
management is situated in India.
(ii) Not Ordinarily Resident- A company is never be not
ordinarily resident.
(iii) Non Resident- If any company does not satisfied the
condition for ordinarily resident then it is called non resident in
India.

10. Tax Liabilities On The Basis Of Residential
Status
 Ordinarily Resident-
(i) Income earned in India & received in India.
(ii) Income earned in India but received outside the India.
(iii) Income earned outside in India but received in India.
(iv) Income earned & received outside in India.
(v) Income earned & received outside in India but control & management
is in India.
 Not Ordinarily Resident-
(i) Income earned in India & received in India.
(ii) Income earned in India but received outside the India.
(iii) Income earned outside in India but received in India.
(iv) Income earned & received outside in India but control &
management is in India.

11.  Non Resident-
(i) Income earned in India & received in India.
(ii) Income earned in India but received outside the India.
(iii) Income earned outside in India but received in India.
ORDINARILY RESIDENT, NOT ORDINARILY
RESIDENT and NON RESIDENT are not liable to pay
tax of the past untaxed foreign income brought into India
in previous year.