Double Taxation Avoidance Agreement Quiz

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Questions and Answers

What determines if an individual is considered ordinarily resident in India?

Continuous stay at the same location for a year

Holding an Indian passport

Only physical presence for more than 182 days

Satisfaction of at least one basic condition and two additional conditions (correct)

How should a stay on a yacht in India be classified?

It is considered illegal residency

It does not count towards presence in India

It counts as part of an individual's presence in India (correct)

It requires special permission from authorities

If a person is in India for a part of a day, how is their stay calculated?

As a full day regardless of hours

On a monthly basis

By counting each hour as a fraction of a day (correct)

Only if they stay at least over 12 hours

What is excluded from the determination of residential status?

Involuntary stay due to passport impounding Signup and view all the answers

What classification should an individual who meets one basic condition but not the additional conditions receive?

Resident but not ordinarily resident Signup and view all the answers

What is not necessary for determining the residential status of an individual?

Having continuous stay in the same place Signup and view all the answers

Which of the following best defines the concept of 'presence for a part of a day'?

Can be aggregated over multiple days Signup and view all the answers

What does not influence the classification of residency regarding stays in India?

The purpose of the stay Signup and view all the answers

What is the deadline for individuals to submit Form-NR if they face double taxation?

March 31, 2021 Signup and view all the answers

Under what condition does the stay period in India not include time spent on a foreign-bound ship?

If the individual is a crew member joining a voyage Signup and view all the answers

Which section provides the additional condition to test when an individual is considered ordinarily resident in India?

Section 6(1A) Signup and view all the answers

How many previous years must an individual have been a resident in India to be considered ordinarily resident?

2 out of 10 Signup and view all the answers

What is the minimum number of days an individual must be present in India over 7 years to meet the resident criteria?

730 days Signup and view all the answers

Which of the following best describes a non-resident individual in the context of the provided content?

An individual who does not fit the criteria of residency Signup and view all the answers

What does 'ordinarily resident' imply for an individual in India?

They have a pattern of residence in India Signup and view all the answers

In the case of an individual who is a crew member of a foreign-bound ship, which rule defines the periods of stay in India?

Rule 126 Signup and view all the answers

What determines if an individual is a resident but not ordinarily resident in India?

Satisfying at least one basic condition and none additional Signup and view all the answers

Under which circumstance is an individual deemed a resident but not ordinarily resident even if they meet none of the basic conditions?

If they are an Indian citizen with income exceeding Rs. 15,00,000 and no tax liability elsewhere Signup and view all the answers

Which of the following conditions must be met for the first exception to apply regarding residential status?

Being an Indian citizen with total income exceeding Rs. 15,00,000 Signup and view all the answers

What is the relevance of basic condition (b) in the special cases mentioned?

It is not relevant in the two special cases. Signup and view all the answers

How is income that is exempt treated in relation to residency assessment?

It is disregarded in the residency assessment. Signup and view all the answers

For the second exception concerning residential status, which condition is NOT a requirement?

Liability to tax in another country Signup and view all the answers

What is true about the additional conditions for determining an individual's residency status?

They are irrelevant for non-resident individuals Signup and view all the answers

What is one of the basic residency conditions for an individual visiting India?

They must be present in India for at least 182 days during the previous year. Signup and view all the answers

Which aspect of residency applies to an Indian citizen returning from abroad?

They must fulfill specific presence conditions in India. Signup and view all the answers

What is the assessment year from which the exceptions concerning residential status are applicable?

2021-22 Signup and view all the answers

What is the implication if an individual is considered resident for the previous year 2021-22?

All income is taxable regardless of source. Signup and view all the answers

Which of the following statements about non-residents is accurate?

Non-residents do not have to meet additional conditions. Signup and view all the answers

Which of the following indicates that an individual is NOT considered ordinarily resident in India?

They satisfy at least one basic condition but none of the additional ones Signup and view all the answers

What is the minimum number of days a person must be in India during the relevant previous year to be considered a resident?

120 days Signup and view all the answers

Which type of income is excluded when calculating the total income ceiling of Rs. 15,00,000?

Income from foreign sources Signup and view all the answers

Which condition qualifies a person as a non-resident in India?

Satisfies none of the basic conditions Signup and view all the answers

What qualifies a person to be considered of Indian origin?

His parents or grandparents were born in undivided India Signup and view all the answers

What does 'liable to tax' mean in the context of residency?

Having an income-tax liability according to the law of one’s country Signup and view all the answers

For a resident to be classified as ordinarily resident, what must they satisfy?

At least one basic condition and two additional conditions Signup and view all the answers

What is the role of the 'basic conditions' in determining residency?

They determine if a person can be a resident or non-resident Signup and view all the answers

How many days in total must a person be present in India over the four years preceding the relevant previous year to be classified as a resident?

365 days Signup and view all the answers

Study Notes

Circular Overview

Circular No. 2/2021 from CBDT addresses relief for individuals facing double taxation despite applicable Double Taxation Avoidance Agreements (DTAAs).
Individuals can report their issues through Form-NR by March 31, 2021, filed electronically to the Principal Chief CIT (International Taxation).

Residency Rules in India

An individual is considered a resident if they are in India for at least 182 days in the relevant previous year.
Special provision for crew members of foreign-bound ships: their stay in India does not count during the voyage as per rule 126.

Conditions for Ordinary Residency

An individual is deemed 'resident and ordinarily resident' if:
- They have been a resident in India for at least 2 out of the last 10 previous years.
- They have resided in India for 730 days or more during the 7 years leading up to the relevant previous year.

Understanding Non-Residency

An individual qualifies as a non-resident if they do not meet any of the basic residency conditions.
Exceptions apply where an individual may still be treated as resident but not ordinarily resident even if none of the basic conditions are met, under certain specified conditions.

Exceptions for Deemed Residency

Exception applies when:
- The individual is an Indian citizen.
- Their total income (excluding foreign sources) exceeds Rs. 15,00,000 in the relevant previous year.
- They are not taxed in any other country by reason of residence or domicile.

Key Points on Determining Stay

Individual stays do not need to be continuous, nor at the same location, to count towards residency.
Presence for a part of a day counts for residency calculations; 24 hours across multiple days counts as one full day in India.
Involuntary stays due to passport issues are excluded when assessing residency status.

Resident but Not Ordinarily Resident Criteria

An individual is considered resident but not ordinarily resident if:
- They meet at least one basic condition but fail both additional conditions.
Relevant in circumstances where basic conditions are satisfied without the additional requirements.

Residency Breakdown Summary

Resident and Ordinarily Resident: At least one basic condition + both additional conditions met.
Resident but Not Ordinarily Resident: At least one basic condition + none or one additional condition met.
Non-Resident: Fails to meet any basic conditions.

Income Considerations for Residency

For residency exclusion based on income, foreign income is disregarded when calculating total income.
Any income deemed to accrue in India must be included in the Rs. 15,00,000 ceiling calculation.

Important Definitions

Person of Indian Origin: Defined broadly, includes anyone with Indian heritage through grandparents.
Income Tax Liability: Indicates any person subject to income tax under the law of any given country.

Visual Summary of Resident Status

A table simplifies the conditions for being a resident, a resident but not ordinarily resident, or a non-resident based on basic and additional conditions.

These notes encapsulate the detailed aspects of residency rules and their associated tax implications per Indian law as specified in Circular No. 2/2021.

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Description

Test your knowledge on the provisions of the Circular No. 2/2021 issued by CBDT regarding double taxation relief. This quiz will cover the necessary actions individuals must take if facing double taxation and the relevant forms to be submitted. Important for those involved in international taxation.