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Questions and Answers
In the context of residential status, when would a company be considered resident in India?
In the context of residential status, when would a company be considered resident in India?
What does 'Place of effective management' refer to in the context of a company's residential status?
What does 'Place of effective management' refer to in the context of a company's residential status?
Why is 'Place of effective management' considered in international taxation?
Why is 'Place of effective management' considered in international taxation?
What is one of the guiding principles laid down by CBDT for determining 'Place of effective management'?
What is one of the guiding principles laid down by CBDT for determining 'Place of effective management'?
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How does 'Place of effective management' act as a tie-breaker rule in double taxation avoidance?
How does 'Place of effective management' act as a tie-breaker rule in double taxation avoidance?
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What does the concept of 'POEM' stand for in international taxation?
What does the concept of 'POEM' stand for in international taxation?
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'Place of effective management' is described as a place where ________.
'Place of effective management' is described as a place where ________.
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'POEM' is considered an internationally recognized test to determine ________.
'POEM' is considered an internationally recognized test to determine ________.
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'Place Of Effective Management' (POEM) functions as a tie-breaker rule in international taxation to ________.
'Place Of Effective Management' (POEM) functions as a tie-breaker rule in international taxation to ________.
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For tax purposes, why is determining a company's 'place of effective management' important?
For tax purposes, why is determining a company's 'place of effective management' important?
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Study Notes
Residential Status for Income Tax
- Identification and classification of a person's residence is crucial for assessing their income under the Income-tax Act, 1961.
- Section 6 of the Income-tax Act outlines the rules for determining an individual's residential status.
Categories of Taxpayers by Residential Status
- Taxpayers fall into three main categories based on their residential status:
- Resident and Ordinarily Resident (ROR)
- Resident but Not Ordinarily Resident (RNOR)
- Non-resident (NR)
Determining Residential Status of Individuals
- Residency is assessed based on the number of days an individual stays in India during the Relevant Previous Year (RPY):
- Stayed in India for fewer than 60 days: Considered NR.
- Stayed in India for 182 days or more: Considered ROR.
- Stayed between 60 and 182 days: Further evaluation needed.
- Additional criteria for RNOR include:
- Departure from India during RPY for employment or as a crew member of an Indian ship.
- Non-resident status in 9 out of the last 10 previous years.
- Indian citizen or Person of Indian Origin (PIO) visiting India for 729 days or less over the last 7 years.
- Total income (excluding foreign income) exceeds ₹15 lakhs.
Definition of Non-resident
- Defined as a person who is not a "resident" under section 2(30) of the Income-tax Act.
- For certain sections, a non-resident includes individuals not ordinarily resident as per section 6(6).
Definition of Transfer
- Transfer of a capital asset encompasses various actions, including:
- Sale, exchange, or relinquishment of the asset.
- Extinguishment of rights related to the asset.
- Compulsory acquisition under any law.
- Conversion of capital assets into stock-in-trade.
- Maturity or redemption of zero-coupon bonds.
- Possession of immovable property linked to specific contractual arrangements.
- Transactions that provide enjoyment or transfer of immovable property.
Tax Implications
- The incidence and imposition of tax are reliant on the individual's residential status, emphasizing its importance in tax liabilities.
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Description
Test your knowledge on the rules for determining the residential status of a person under section 6 of the Income-tax Act, 1961. Learn about the classification into categories like Resident and ordinarily resident (ROR) and Resident but not ordinarily resident.
