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person

INDIVIDUAL/HUF OTHERS

RESIDEDENT IN INDIA NON RESIDENT RESIDENT NON RESIDENT

NOT ORDINARILY
ORDINARILY RESIDENT IN
RESIDENT IN INDIA INDIA

HOW TO DETERMINE RESIDENTIAL STATUS OF INDIVIDUAL SEC.6(1)

 Resident in India An individual is said to be a resident in India, if he satisfies any one of the following
conditions –

 i) He is in India in the previous year for a period of 182 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
4 previous years immediately preceding the relevant previous year [Sec. 6(1)(c)]

 Taxpoint : Given Conditions are alternative in nature i.e. assessee needs to satisfy any one condition.

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 year

Exceptions to the above rule

 A. In the following cases, condition (ii) of sec. 6(1) [i.e. sec. 6(1)(c)] is irrelevant:

 1. An Indian citizen, who leaves India during the previous year for employment purpose.

 2. An Indian citizen, who leaves India during the previous year as a member of crew of an Indian ship.

 Taxpoint: Above assessee shall be treated as resident in India only if he resides in India for 182 days or more
in the relevant previous year.

B. In case of an Indian citizen or a person of Indian origin# comes on a visit to India during the previous year,
modified condition (ii) of sec. 6(1) is applicable:
Case Modified condition (ii) of sec. 6(1)

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His total income, other than the income from foreign He is in India for a period of 120 days or more (but less
sources! , exceeds `15 lakhs during the previous year than 182 days) during the previous year and for 365 or
more days during 4 previous years immediately preceding
the relevant previous year

His total income, other than the income from foreign He is in India for a period of 182 days or more during the
sources, does not exceed `15 lakhs during the previous previous year In short, sec. 6(1)(c) is not applicable
yeaR

 Person of Indian origin: A person is deemed to be of Indian origin if he or either of his parents or grand
parents were born in undivided India. Here, grand parents may be paternal or maternal.
 ! “Income from foreign sources” means income which accrues or arises outside India (except income
derived from a business controlled in or a profession set up in India) and which is not deemed to accrue or
arise in India.

C. An individual shall be deemed to be 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;

 c. He is not s atisfying any of the basic conditions given u/s 6(1) [i.e., 182 days or 60 days + 365 days]; and

 d. He is not liable to tax in any other country or territory by reason of his domicile or residence or any other
criteria of similar nature. [Sec. 6(1A)

Additional conditions to test whether resident individual is ‘Ordinarily resident or not’ [Sec. 6(6)]

 A resident individual in India can further be categorized as –

 i) Resident and ordinarily resident in India

 ii) Resident but not ordinarily resident in India

Resident and ordinarily resident If a resident individual satisfies the following two additional conditions, he will be
treated as resident & ordinarily resident in India

 a) He has been resident in India [as per sec. 6(1)] in at least 2 out of 10 previous years immediately preceding
the relevant previous year; and

 b) He has resided in India for a period of 730 days or more during 7 previous years immediately preceding
the relevant previous year.

 Taxpoint: To be a Resident & Ordinarily resident in India, one has to satisfy at least one condition of sec. 6(1)
& both the additional conditions of sec. 6(6)

Resident but not ordinarily resident If a resident individual does not satisfy both additional conditions as given u/s
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
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 c. He is not liable to tax in any other country or territory by reason of his domicile or residence or any other
criteria of similar nature.

 d. He is deemed to be resident in India u/s 6(1A)

 B. An individual shall be deemed to be resident but not ordinarily resident in India, if following conditions are
satisfied:

 a. He is an Indian citizen or a person of Indian origin.

 b. He comes on a visit to India during the previous year

 c. His total income, other than the income from foreign sources, exceeds ` 15 lakhs during the previous year

 d. He is in India for a period of 120 days or more (but less than 182 days) during the previous year and for
365 or more days during 4 previous years immediately preceding the relevant previous yeaR

 Taxpoint: If aforesaid conditions are satisfied, then such individual shall be deemed to be resident but not
ordinarily resident even though he has satisfied both conditions specified u/s 6(6).

HUF SEC 6(2)

HUF

NON
RESIDENT
RESIDENT

NOT
ORDINARILY
ORDINARILY

An HUF can be either a resident or non-resident in India. Again, a resident HUF can further be classified as ‘Ordinarily
resident’ and ‘Not ordinarily resident

RESIDENT

 An HUF is said to be a resident in india, if he satisfies any one of the following conditions

: When the control & management of affairs of HUF is wholly or partly situated in India during the relevant previous
year, then it is treated as resident in India

Control and management means

 controlling & directive power;

 • actual control & management (mere right to control & manage is not enough);

 The place of central control & management is situated where the head, the seat & the directing power is
situated.

Non-resident HUF:

 An HUF is non-resident in India if the control & management1 of its affairs is wholly situated outside India.

Ordinarily resident in India:

If the ‘karta’ or manager of a resident HUF satisfies both additional conditions given u/s 6(6), HUF is said to be an
ordinarily resident

Not-ordinarily resident.
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 If the ‘karta’ or manager of a resident HUF do not satisfies both additional conditions given u/s 6(6), HUF is
said to be a not-ordinarily resident.

COMPANY SEC 6(3)

COMPANY

NON
RESIDENT
RESIDENT

 RESIDENT

 Resident Company: An Indian company is always a resident in India.

 A non-Indian company is said to be a resident in India, if its place of effective management, in that year, is in
India.
 “Place of effective management” means a place where key management and commercial decisions that are
necessary for the conduct of the business of an entity as a whole, are in substance made

Non-Resident Company

 : If place of effective management, in that year, is not in India, the said company is nonresident in India for
the relevant previous year.

 Taxpoint: In case of company, there is no sub-division like ‘Ordinarily resident’ or ‘Not ordinarily resident’

FIRM OR AN Association of Persons (AOP) Or Body of Individuals (BOI) Sec.6(4)

 Resident: A firm or an AOP or BOI is said to be a resident in India, if control & management of its affairs are
wholly or partly situated in India during the relevant previous year.

Control & management is vested in hands of partners in case of firm and principal officer in case of an AOP/BOI

Non-resident:

 If control & management of its affairs are situated wholly outside India, then it is a non-resident in India.

 Taxpoint: In case of firm or BOI or AOP, there is no subdivision like ‘Ordinarily resident’ or ‘Not ordinarily
resident’

Any other person

Any other
person

Non
resident
resident
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 Resident

Any other assessee will be treated as resident in India if the control & management of its affairs is situated wholly or
partly in India.

 Non resident

 If control & management of affairs of the assessee, are situated wholly outside India, it is a nonresident in
India

Incidence of Tax

Nature of income Resident and Resident but Non resident

ordinarily not ordinarily
resident

Income accrued or deemed to be accrued Taxable Taxable Taxable

and received or deemed to be received in
India

Income accrued outside India but received Taxable Taxable Taxable

or deemed to be received in India

Income accrued or deemed to be accrued Taxable Taxable Taxable

in India but received outside India

Income accrued and received outside India Taxable Taxable Not Taxable
from a business controlled in or profession
set-up in India

income accrued and received outside India Taxable Not taxable Not taxable
from a business controlled or profession
set-up outside India.

Income accrued and received outside India Taxable Not taxable Not taxable
in the previous year (it makes no difference
if the same is later remitted to India)

Income accrued and received outside India Not taxable Not taxable Not taxable
in any year preceding the previous year
and later on remitted to India in current
financial year
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INCOME DEEMED TO ACCRUE OR ARISE IN INDIA [SEC. 9)