Individual Residential Status as per Section 6

• Total income is computed after determining the assessee's residential status during the previous year.
• Income tax rules vary based on whether the assessee is a resident or a non-resident.
• Citizenship differs from residential status for income tax purposes.

Residential Status of Individuals (Section 6(1) / 6(6)(a))

• An individual is a resident if they meet one of two basic conditions:
• Staying in India for 182 days or more during the relevant previous year (RPY).
• Staying in India for 60 days or more in RPY and also for 365 days or more during the 4 years preceding the RPY.
• The period of stay doesn't need to be continuous.
• Both arrival and departure dates are counted as stay in India.
• An individual is a resident and ordinarily resident if both conditions are met
• Resident in any 2 out of the last 10 previous years.
• Total stay in India is 730 days or more during the last 7 years.

Exceptions (Check only 182 days)

• For Indian citizens leaving India for employment purposes.
• For Indian citizens leaving India as crew members of an Indian ship.
• The joining and signing-off dates on a continuous discharge certificate are considered outside India for crew members on foreign-going ships.

Deemed Resident (Section 6(1A))

• An individual is deemed a resident if all conditions are met:
• They are an Indian citizen.
• Their total income, excluding foreign sources but including income from foreign businesses controlled in India, exceeds ₹15 Lakhs.
• They are not paying tax in any other country due to their domicile, residence, or similar criteria.

Residential Status of HUF (Section 6(2)/6(6)(b))

• A Hindu Undivided Family (HUF) is resident in India if the control and management of its affairs are wholly or partly in India.
• If Karta satisfies both additional conditions, an HUF is considered Resident and Ordinarily Resident (ROR); otherwise, it is Resident but Not Ordinarily Resident (NOR).

Residential Status of Partnership Firm/BOI/AOP (Section 6(2))

• A partnership firm, Body of Individuals (BOI), or Association of Persons (AOP) is a resident if the control and management are wholly or partially in India.

Residential Status of Company (Section 6(3))

• Indian companies are always residents.
• Foreign companies become residents if their Place of Effective Management (POEM) is in India.

Scope of Total Income or Tax Incidence (Section 5)

• For a Resident and Ordinarily Resident (ROR):
• Indian income is taxable.
• Foreign income is taxable.
• For a Resident But Not Ordinarily Resident (NOR):
• Indian income is taxable.
• Foreign income is generally non-taxable, with exceptions.
• For a Non-Resident (NR):
• Indian income is taxable.
• Foreign income is generally non-taxable.

Income Deemed to Accrue or Arise in India (Section 9)

• Income accruing or arising directly or indirectly from any business connection in India is taxable. The following are not considered business connections in India:
• Purchases for export.
• Collection of news for transmission outside India.
• Shooting films in India by foreign entities with no Indian citizen/resident partners or shareholders.
• Specific activities related to the display of uncut and unassorted diamonds in special zones by foreign companies.
• Income earned as salary is deemed to accrue or arise in India if earned in India.
• Salary payable by the Government to an Indian citizen for services outside India is deemed to accrue or arise in India (subject to certain exemptions).
• Income from the transfer of a capital asset situated in India is deemed to accrue or arise in India.
• Dividends paid by an Indian company outside India are taxable.
• Interest on a loan is taxable

Illustrations

• These provide examples of how to apply the rules of residential status in various situations