Determination of Residential Status


https://finotax.com/income-tax/non-resident/status

For the purpose of Income-tax, an individual may have any one of the following residential status:

  1. Resident and ordinarily resident in India
  2. Resident but not ordinarily resident in India
  3. Non-resident

The residential status of the taxpayer is to be determined every year by applying the provisions of the Income-tax Act. The residential status of an individual may change from year to year.

Resident

As per Section 6(1) of Income Tax Act

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An individual is said to be RESIDENT in India in any previous year, if he satisfies at least one of the following conditions:

  1. he is in India in that year for a period of 182 days or more ;
    or
  2. he is in India for a period of 60 days or more during the previous year and 365 days or more during the period of 4 years immediately preceding the previous year.

Exceptions : The condition no. 2 is not taken into consideration in following cases:

  1. If an Indian citizen leaves India during the previous year for the purpose of employment outside India;
  2. If an Indian citizen leaves India during the previous year as a member of the crew of an Indian ship; or
  3. If an Indian citizen or a person of Indian origin comes on a visit to India during the previous year.

* A person is deemed to be of Indian origin, if he or either of his parents of any of his grand parents was born in undivided India.

Resident and Ordinarily Resident / Resident but not ordinarily resident

As per Section 6(6) of Income Tax Act, a resident individual is treated as Resident and ordinarily Resident in India he satisfies both the following conditions:

  1. He is resident in India for at least 2 years out of 10 years immediately preceding the relevant year.
  2. His stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

A resident individual who does not satisfy any of the aforesaid conditions or satisfies only one of the aforesaid conditions will be treated as Resident but not ordinarily resident.

Residential Status

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