Residential Status of Person under Income Tax
The charging of Income Tax on any person depends on its residential status in India. Here we look at how the residential status of a person is determined.
One of the basic tests to determine the Income of any Person in India is based on his residential status of that person in India.
The Income Tax Act provides Section 6 in which the residential status of a person is defined. Once the residential status is confirmed, the Income that is chargeable to tax can be determined in respect of that person.
Here we will look at various provisions relating to the Residential status of a person in India.
A. In the case of an individual, there are three conditions to determine his residential status in India.
They are :
(a) A person is resident in India during a year if he is in India for 182 days or more in that year ;
or
(b) If he is in India for a period of 60 or more days during the year and has been in India for a period of 365 or more days out of the preceding 4 years.
However, if a person leaves India during the year as a member of the crew of a ship or for the purpose of employment outside India, he will be resident in India if during that year he is in India for a period of 182 days (substituted instead of 60 days).
Also, if a person who is of Indian origin who is outside India comes to visit India, then the period of 60 days is substituted as 182 days.
or
(c) If a person who is a citizen of India and has a total Income in India of more than Rs.15,00,000 (other than Income from any foreign Source) will also be deemed to be a resident of India during that year if he is not liable to tax in any other country due to his residency or domicile or any other reason.
This clause has been added w.e.f. Asstt. Yr. 2021-22 i.e. it will be applicable from the Financial year 2020-21 onwards.
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B. In the case of HUF, Firm, or AOP, the same will be resident in India except in cases where the control and management of its affairs are situated outside India.
C. In the case of the Company, the same is resident in India if :
(a) It is an Indian Company;
(b) Its place of effective management is in India during that year.
D. In all other cases, a person is said to be resident in India if its control and management of affairs are in India.
There is also a concept of Not ordinarily resident in India as per the Income Tax Act.
A person is said to be 'Not ordinarily resident' in India if :
(a) If an Individual is non-resident in 9 out of 10 previous years or has been in India for a period of 729 days out of 7 years preceding the current year.
(b) In the case of HUF, the manager is non-resident in 9 out of 10 previous years or has been in India for a period of 729 days out of 7 years preceding the current year
(c) a citizen of India having a Total Income of more than 15 lakhs (not from a foreign source) who has been in India for more than 120 days but less than 182 days during the year;
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