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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

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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