Residential status

19 Oct 2022

Residential status


Meaning of residential status


                Residential status is very important in income tax act as the determination of tax liability depends on it.



RESIDENT

     Under sec 6(1). A person is said to be resident in previous year(PY) in India of he/she satisfies at least one of the following conditions

(1)   He/she in India for a period of 182 days or more during the PY

 

(2)   He/she is in India for a period of 60 days or more during the PY and 365 days or more during the 4 years immediately preceding the PY.

Note; - However from the FY 2020-2021the period is reduced to 120 days or more for such an individual whose total income exceeds Rs 15,00,000


NON RESIDENT

Any individual taxpayer who is neither a resident nor a resident not ordinarily resident is considered as Non-resident.



He/she is ordinarily resident or not ordinarily resident (ROR)

         A resident individual is treated as resident and ordinarily resident in India if he/she satisfies condition of resident and satisfies both the following conditions:

         (1) He/she has been resident in India at least for 2 years out of 10 years immediately preceding the relevant previous year.

         (2) He/she has been in India for a period of 730 days or more during the 7 years immediately preceding the relevant previous year.

  NOTE: The person who does not satisfies any of the above conditions is a resident but not ordinarily resident (RNOR)

 



Residential status of HUF

      A Hindu undivided family (HUF) is said to be resident India if the control and management of its affairs are wholly or partly situated India A HUF is treated as resident and ordinarily resident in India if the Karta is ordinary resident i.e satisfies both of the following conditions:

(1)   He/she has been resident in India at least for 2 years out of 10 years immediately preceding the relevant previous year.

(2)   He/she has been in India for a period of 730 days or more during the 7 years immediately preceding the relevant previous year.



Residential status of a firm or AOP

           

         A partnership firm or association of persons is said to be resident in India if control and management is wholly or partly situated within India during the relevant previous year. It is, however, treated as non-resident in India if the control and management is under situated wholly outside India



Residential status of a company:

         An Indian company is always resident in India. As per 6(3)(i). Even if an Indian company is controlled from a place located outside India, the Indian company can never be non-resident

 


Frequently Asked questions:

1.How many types of residential are there?

Ans. Residential status of an individual can be divided into three types.

(a) Resident

And again, resident is divided into two types

(i)               Ordinarily resident

(ii)              Non Ordinarily resident

(b)   Non resident

(c) Deemed resident


2.Who is deemed resident?

            An Indian citizen earning a total income of more than 15 lakhs(Other than income from foreign) shall be deemed to be resident in India if he is not able to pay tax in any country.


3. Who is a resident?

            An individual is said to be a resident, if he/she physically presents in India for a period of 182 days or more in the FY.


4. Who is called Non resident?

            An individual who is a citizen of  India or a person of indian origin and who is not a resident of India.

 



Sirisha Mandala