Direct Txation

I.2.1 General points to be kept in mind reurding resdentialstatus of a person

Dilerent or euch Residential status is determined in respect of each previous year. In other w N Solut
DEevioN yoar residentialtatus of a person may vary from one previous year to another previouswi S
Single Status tor ench Apernon can have only one residential status for a previous year i.e. he cannot
sOurce of income resident for one source of income and oon-resident for another source.
pact ofoitizenship Clizenship and residential status are two diflerent concepts. Acitizen of India may
be a resident in India forthe purpose of income-tax.
Counry Speeifie Aperson can have NAne residentialstatus in more than onc country.

1.2.2Determination of Residential Status

Individual|See. 6(1)I Illus
First of all, an individual is classified as resident or non-resident and again a resident individual may furthe Andy
categorized as Ordinarily Resident orNot OrdinarilyResident in lndia. 2019
respe

Individual Solu
Duri
prev

Ye
Resident Non-resident
No

Thu

Resident in India Exe

A.
An individual is said to be a resident in lndia,if he satisties any one of the following conditions -
() He is in India in the previous year for aperiod of 1I82 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
previousyears immediately preceding the relevant previous year [Sec. 6(1 )\(¢)]
Taxpoint:Given Conditions are alternative in nature i.c. assesee needs to satisfy any one condition. B.
Sec. 6()(a): P.Y: Stays 182 days or more
Or
Sec/6(1)(c): P.¥: Stays 60 days or more
+4 PPY: Stays 365 days or more

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 yo
llustration 4:
Sam came to India first time during the P.Y. 2022-23. During the previous year, he stayed in India for (i)S0 day
(ii) 183 days; &(ii) 153 days. Deternine his residential status for the A. Y. 2023-24.
Th

30 The Institute of Cost Accountants of ln

 Sotatiog:

smee6l He s, herefore, a
tx-redent i ia for e PY 212223
seied ns 61} Hes, erefore, a resadent in
Idia for te PY
Soresades nI aorly or 153 days during te previos yer 223
12-23. Tho he reite r ran 5
be is n-ressder for the P.Y. 2022-23

Tstration 5.
A Bris atocal coes to India for tte fxs tine
N190 2020-21, 2121-22 d 2022-23, be wzs áz 01-19. Driz e ca 2113
in Ibta for 55 deyi 9 deys, S czy 15)
setvy. Determine his residential szts for tte ays zys
Sobatioa:
ssessmet y 1123-24.

Dring te prvios yer 2022-23, Andy w2s in India for 70 dzs &
previs yer, he #25 in India for 355 days 2s shoran dig 4 ye ezey p e e
belc:
Year
2018-19 2019-20 2020-21 2321-22 Tra
Na. of days stayed in India 55 60 160 355
Ths, be £oes not satisfy Sec.6(I) & corsequetiy, be is a non-residet in India for the PY. N2-23
Exceptions to the above rule
A h te folo=ing cses, condition () of sec. 6(1) [Le. sec. 6(1c)] is
irelevzt
1. An Ibdizn citize, wholeaves Indiz uring the
previous yer for employTmet purpose.
2 An Itizn citizen, who kaves India dring the preios year sa
menber of crew of an Indian ship.
Taxpoint: Above zssessee shall be trezted s resident in India onky if heresides in India for 182 days or more
in the relevant previous year.
B. in case of n Indian citizan r a peson of Indizn origin comes on a visit to
India duing the previos yez
odifed condition (ü) of sec. 6(1) is applicable:
Case Modified condition () of sec. 6(1)
His total income, other than the income from He is in India for a period of 120 days or more (bt
foreign sources!, exceeds 15 lakhs during the less than 182 days) during the previous year nd for
previous year 365 or more days uring 4 previous years immediately
preceding the relevant previous year
His total income. other than the income from He is in India for a period of 182 days or more uring
foreign sources. does not exceed 15 lakhs during the previous year In short, sec. 6(1Xc) is not applicable.
the previous yezr
Person of Indian origin: A person is deemed to be of Indian origin if he or eiher of his parents or grand
parents were born in undivided India. Here, grand parents may be paternal or maternal.
te institute of Cost Accountznts of india 31
 Direct xation
Income from foreign sOurces" mcans income which Hccrues or arises outside India (exeetinne day
deemed
trom a business controlled in or a profession sct up in India) and which is not
India.
C. An individual shall be deemed to be resident in India, if following conditions are satisfied
He is a citizen of India
b. His total income, other than the income from foreign sources, exceeds 15 lakhs
during the prec)
year; A
C. He is not satisfying any ofthe basic conditions given u/s 6(1) (i.c., 182 days or 6) days +365
d.
criteria of similar nature. [Sec. 6(1A)]
daysa
He is not liable to tax in any other country or territory by reason of his domicile or residenee or
any aAddit
Aress
Taxpoint:
However, if such individual has satisfied either of the basic conditions, then he shall be treated as rea
in India ws 6(1). Resi
Further note that the exception is not applicable in case of foreign citizen even if he isa
origin.
persn of ta
If these conditions are satisfied, then suchindividual shall be deemed as resident irespective of ruá
of days of his stay in India.
Incase of an individual, being a citizen of India and a
stay in India shall, in respect of an eligible voyage, not membertheof the crew of a shíp, the period or periods
include period beginning on the date entered intos
Continuous Discharge Certificate in respect of joining the
ending on the date entered into the Continuous Discharge ship by the insaid individual for the eligíble voyage za
from the ship in respect of such voyage. In simple words,Certificate respect of signing off by that indívia
in the Continuous Discharge Certificate the
joining is recorded as 1st January 2020 and the date of ending the date
the entire period of 31 days shall be excluded from his stay in voyage is recorded as 31st January 2020, te
India
"Eligible voyage" shall mean a voyage undertaken by a ship engaged in the
international traffic where carriage of passengers or freighi
(i) for the voyage having originated from any port in India,
has as its destination any port outside India; and
|(i) for the voyage having originated from any port outside Re
India, has as its destination any port in India'. If
Illustration 6:
Miss Pal, an Indian citizen, left India for first time on 1"
11" Jan, 2023 for only 170 days. Determine her residential April, 2022 for joining job in Tokyo. She came to Indiat E:
status for P.Y. 2022-23. A.
Solution:
Number of days Miss Pal stayed in India can be calculated as under:
P.Y. Apr May June July Aug
22-23 1
Sep Oet Noy Dee Jan Feb Mar Tot
21 28 31 8
23-24 30 31 29
90
Since she left India for employment purpose, hence for
days. However, she is in India for only 81 days during becoming
the
resident she has to stay in India for at least
2022-23. previous year, thus she is a non-resident for the P

32
The Institute of Cost Accountants of Iad
 BASIeS OT Inceme laxAet
Points to be kept in mind
(a) Stay at same place in Indìa is not
necessary.
() Continuous stay in India is not
necessary.
(c) Aperson shall be deenmed to reside in India, if he
is on the territorial waters of India. For
individualstays on a ship, which is in the territorial waters instance, if an
of India, then it shall be treated as his
India. presence in
Additional conditions to test whether resident individual is Ordinarily
Aresident individual in India can further be resident or not[Sec. 6{6)|
categorised as -
() Resident and ordìnarily resident in India
(ü) Resident but not ordinarily resident in India
Resident and ordinarily resident
STEPI If a resident individual satisfies the following two
STEPI additional conditions, he will be treated as resident
Determnining resident and Classification of resident
non-esident status into R&OR and RNOR & ordinarily resident in India -
Physical Presence in India Resident in India in 2 out (a) He has been resident in India [as per sec.
of 10 preceding years
182 days or more in P.Y. AND
6(1)] in at least 2 out of 10 previous years
OR Stay in India for 730 days immediately preceding the relevant previous
or more in 7precedng year; and
* 60days or more in the
years
P.Y and 365 days or more
in the preceding 4 years
(b) He has resided in India for a period of 730 days
VES NO
or more during 7 previous years immediately
NO R&OR RNOR preceding the relevant previous year.
RESIDENT NON
RESIDENT
Taxpoint: To be a Resident & Ordinarily resident
Subsituted by l82 days for (i) person leaving India for employment; (ii) in India, one has to satisfy at least one condition of
person leaving India as a crew of an Indian ship:(i) a citizen of India ot PIO sec. 6(1) & both the additional conditions of sec.
who comes to India on a visit during the P.Y.
6(6).
Resident but not ordinarily resident
If a resident individual does not satisfy both additional conditions as given ws 6(6), he is "Resident but not
ordinarily resident in India".
Exceptions
A. An individual shall be deemed to be resident but not ordinarily resident in India, if following conditions
are satisfied:
(a) He is a citizen of India
(b) His total income, other than the income from foreign sources, exceeds 15 lakhs during the previous
year; and
(c) He is not liable to tax in any other country or territory by reason of hisdomicile or residence or any other
criteria of similar nature.
(d) He is deemed to be resident in India w/s 6(1A).
Territorial water extends to 12 nautical miles (1l nautical miles 1.1S15 miles 1.853 km) into the sea fronm the base line on the coast of Indiaand
include any bay, gulf, harbour, creek or tidal river

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