Residential status

Different taxable entitiesSection 6 lays down the test of residence for the following taxable entities: (a) An individual (b) A Hindu undivided family (c) A firm or association of persons or a body of individuals (d) A company & (e) every other person Different kinds of residential status Assesses are either (a) Resident in India, or Non-Resident in India. As far as Resident individuals & HUF are concerned, they can further divided in to two categories, i) Resident and ordinarily resident or ii) Resident but not-ordinarily resident. All other assesses (viz, a firm, an association of persons, a company and every other person) can simply be either a resident or a non-resident.

Residential status of an Individual [ sec. 6 ] An Individual may be (a) Resident and ordinarily resident (b) Resident but not ordinarily resident (c) Non-resident Resident in India [sec. 6(1) ]: An individual is said to be resident in India in any previous year, if he satisfies any one of the following basic condition. 1. He is in India in the previous year for a period of 182 days or more. OR 2. He is in India for a period of 60 days or more in the previous year and 365 days or more in 4 years immediately preceding the previous Year.

Note: The period of 60 days in basic condition 2 above is extended to 182 days in case of a) An Indian citizen who leaves India during the previous year for the purpose of employment outside India or an Indian citizen who leaves India during the previous year as a member of the crew of an Indian ship. b) Indian citizen or a person of Indian origin who comes on a visit to India during the previous year.

Non-resident: If any of the above conditions are not satisfied an individual is said to be Non-Resident in India If an individual is resident in India we can see whether he is (a) Resident and ordinarily resident, or (b) Resident but not ordinarily resident (a) Resident and ordinarily resident [ sec. 6(6) ]: A resident individual is treated as resident and ordinarily resident in India if he satisfies the following two additional condition 1. He has been resident in India in at least 2 out of 10 previous Years immediately preceding the relevant previous year. 2. He has been in India for a period of 730 days or more during 7 years proceeding the relevant previous year.

(b) Resident but not ordinarily resident: A resident individual is treated as resident but not ordinarily resident in India if any one or both the additional conditions are not satisfied.

Residential status-Hindu Undivided Family(HUF), Association Of Persons(AOP) [section 6(2)] Resident: A HUF, Firm, or AOP is said to be resident in any previous year control and management of its affairs is wholly or partly situated in India. if

Non-Resident : A HUF, Firm, or AOP is non-resident in India if control and management of its affairs is wholly situated outside India Resident and Ordinarily Resident (HUF) If the karta or the Manager of the resident HUF satisfies the additional two conditions u/s 6(6) as applicable to Individuals, the HUF would be treated as RESIDENT AND ORDINARILY RESIDENT(HUF) Resident But Not Ordinarily Resident (HUF) If the karta or the Manager of the resident HUF does not satisfies both the additional conditions u/s 6(6) as applicable to Individuals, the HUF would be treated as RESIDENT But Not ORDINARILY RESIDENT(HUF) Residential status COMPANY[section 6(3)] A Company is said to be resident in India in any previous year, if, a) b) It is an Indian company OR

During that year the control and management of its affairs is situates Wholly in India

Explanation : 1) 2) An Indian company is always treated as resident in India. A foreign company is resident in India only if, during the previous year, control and management of its affairs is situated Wholly in India

Residential status Other assesses [section6(4)] Any other assesses is said to be resident in India in any previous year if the
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Control and management of its affairs is wholly or partly situated in India In other words, it can be states that any other assessee can be treated as non-resident if the control and management of its affairs are Wholly situated outside India Note: In case of firm, AOP, company and other assesses, once such an assessee is is resident it will automatically become RESIDENT AND ORDINARILY RESIDENT. They need not fulfill any other conditions. Thus the concept of R but NOR does not exist in above mentioned assessesses. problems on determination of residential status 1. Mr. Bhardwaj who is an Indian citizen working in London, came on a visit to India on 12 th December, 2012. Prior to 1st April, 2012 he was in India during 2008-09 to 2011-12. Determine his Residential status for the assessment year 2013-14. 2. Mr. A, a British national, comes to India for the first time during 2006-07. During the financial years 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 he is in India for 55days, 60days, 80days, 160days and 70days respectively. Determine his residential status for the assessment year 2013-14. 3. Mr. Louis Waugh, a cricketer comes to India in every cricketing season for the last six years. He came to India on 15-10-2012 and left India on 10-01-2013. He was in India for more then 365 days in the preceding four previous years. Determine his residential status for the assessment year 2013-14. 4. Mr. peter is a foreign citizen. He visits India every year for a period from 1 st April to 10th July. Find out his residential residential status for the assessment year 2013-14. 5. Mr. Augustin, a Canadian citizen visits India for the first time on 06-04-2011. He was in India through out the financial year 2012-2013. Determine his Residential status for the assessment year 2013-14. 6. Ms Melissa, a Malasian citizen leaves India, after a period of 10 years stay on 01-06-2010, during the financial year 2011-12, she comes to India for a period of 46 days. Later she returns to India on 10-10-2012. Determine her Residential status for the assessment year 2013-2014. 7. Pradeep Kumar, an Indian citizen, leaves India for the first time to take up employment in Kuwait, on September 20, 2010. Thereafter, he came to India, on April 10, 2011 for a visit and stays up to September 10, 2011. On September 10, 2011, he goes to Kuwait and comes back on May 10, 2012. He stays India thereafter. Find out his Residential status for the assessment year 2013-14.

8. Mr. Rajesh came to India for the first time from America o 1 st oct. 2012. Since the day of his arrival he stayed at Mumbai till 24th Dec.2012 and thereafter in Goa till 15th April, 20013 when he left for England. Determine his Residential status for the assessment year 2013-14. 9. Mr. John, an Indian citizen receives appointment as a supervisor in a oil company in Kuwait. He leaves India, for the first time to rake up the job in Kuwait, on September 28, 2012. Determine his Residential status for the assessment year 2013-14 .