1. Residential Status and Incidence of
Tax (Section 6)
• Resident
• Not-Ordinarily Resident
• Non-Resident
2. General Rules
• Citizenship and residential status are separate
• Determined on the basis of residence of the PY
• Status varies from year to year - It may change from one PY to
another PY
• Stay at one place - Assesse may have different places of residence in
the same PY
• Stay in India Continuously/frequency- May be in and out of India any
number of times
• Type of accommodation for stay is immaterial
• Day of arrival in India as well as the day of departure shall be counted
as stay in India.
• Person of Indian origin
4. Rules for Individuals
Basic conditions-
A - Assessee has resided in India in the previous year for 182
days or more
B – Assessee has resided in India for 60 days or more in the PY
and 365 days or more in the four years before PY
Additional conditions-
A - Assessee is resident in at least 2 out of 10 years before PY
B – Assessee has been in India for 730 days or more during 7
years before PY
5. Exceptions
(only basic condition A is applicable)
• Indian citizen who leaves India during the
PY for the purpose of employment
• Indian Citizen who leaves India during the
PY as member of the crew of Indian ship
• Indian Citizen or person of Indian Origin
who comes on visit to India during the PY.
• Meaning of Person of Indian Origin
6. Examples
1. X left India for the first time on May 20, 2013. During the
financial year 2015-16, he came to India once on May 27
for a period of 53 days. Determine his residential status.
2. X was born in Chennai in 1992. Later he migrated to
Canada in June 2009 and took citizenship of that country
with effect from December 26, 2014. His parents were
born in Bengal in 1960 and his grandparents were born in
India in 1946. He comes to India during 2015-16 for a visit
of 150 days. During earlier four years he was in India for
400 days. Find the residential status of X for the AY 2016-
17.
7. 3. X, comes to India for the first time on April 16 , 2013.
During his stay in India up to October 5, 2015, he stays at
Delhi up to April 10, 2015 and thereafter remains in
Chennai till his departure from India. Determine his
residential status for AY 2016-17.
4. X, a foreign national not being a person of Indian origin
comes to India for the first time on April 15,2011. During
the financial years 11-12, 12-13,13-14, 14-15 and 15-16
he is in India for 130 days, 80 days, 13 days ,210 days and
75 days respectively. What is the residential status of X
for the AY 2016-17?
8. • 5. X an Indian citizen who is appointed as a
senior taxation officer by the government of
Nigeria, leaves India for the first time on
September 26, 2015 for joining his duties in
Nigeria. During the previous year 2016-17, he
comes to India for 176 days. Determine the
residential status of X for the AY 2016-17 and
2017-18.
9. Residential Status of HUF
• Basic Condition
– Control and management of the affairs is situated either completely or
partially in India
• Additional Conditions
– A – The Karta is resident in at least 2 out of 10 years before PY
– B – The Karta has been in India for 730 days or more during 7 years
before PY
• WHEN is a HUF?
– Resident
– Not-Ordinarily Resident
– Non-Resident
• Meaning of “Management and Control
10. Residential Status of Firm/AOP
• Basic Condition-
– Control and management of the affairs is situated
either completely or partially in India
• WHEN is a firm or AOP?
– Resident
– Non-Resident
11. Residential Status of Company
• Basic Condition
– Indian Company OR
– Control and Management of affairs situated wholly
in India
• WHEN is a company?
– Resident
– Non-Resident
12. Rules for others
Control and Management of the affairs of the taxpayer
Wholly in India Wholly outside India Partly inside and partly outside India
HUF Resident NR Resident
Firm Resident NR Resident
AOP Resident NR Resident
Indian Co Resident Resident Resident
Non Indian Co Resident NR NR
Any other Resident NR Resident
13. Tax incidence on the basis of Residential status
R-OR R- NOR NR
Indian Income Taxable Taxable Taxable
Foreign Income Taxable Only two types of Foreign income
taxable
Non taxable
For Resident and
Ordinarily Resident
Both Indian and Foreign Income are taxable
For Resident but Not
Ordinarily Resident
Indian Income are taxable
Only two types of Foreign Income are
Taxable**
**Case 1 – If it is business income and business is
controlled wholly or partly from India
**Case 2 –If it is income from Profession which is set
up in India
For Non-Resident Only Indian Income is Taxable
14. Meaning of Indian and Foreign Income
• Indian Income-
– If during the PY income is-
• Received in India OR
• Deemed to be received in India OR
• Accrues in India OR
• Deemed to accrue in India OR
• Foreign Income
• Income is not received or deemed to be received in
India AND
• Income is not accrued or deemed to be accrued in India
15. • Meaning of -
– Received in India –
– First receipt
– Cash vs Kind
– Deemed to be received in India-
– Interest credited to RPF
– Contribution of employer to PF
– TDS
– Accrue or arise in India
– Deemed to accrue or arise in India -
16. Deemed to accrue or arise in India
1. Income from Business Connection-
a) Maintaining a branch office in India
b) Appointing an agent in India
c) Erecting a factory in India
d) Forming a local subsidiary company
2. Income from any property/ asset/ source of Income situated
in India
3. Income through transfer of capital asset situated in India
4. Income under “salaries” if services are rendered in India
5. Salary payable abroad by Government to citizen of India
6. Dividend paid by an Indian Company
7. Income by way of interest/ royalty/ technical fees-
• When received from central or state govt
• When received from Resident
• When received from Non resident
17. Example 1
X is resident in India for the Assessment Year 2016-17.
He gives the following information in respect of his
income for the PY 2015-16. Find his Taxable income if
he is Resident, Non Resident and R-NOR.
– Capital gain on sale of house situated in Pune (sale
consideration received in Nepal ) Rs 10 lakhs
– Salary received in Sri Lanka for rendering service in Tamil
Nadu Rs 1,60,000
– Interest received from Govt of India (it is paid to him in Sri
Lanka the money is utilized by the Govt outside India) Rs
2,56,000
– Royalty received from A ltd (A foreign company non
resident in India) outside India. Royalty is paid for a
manufacturing business situated outside India – Rs
92,00,000
18. Example 2
Following are the incomes of Shri Agrawal during the previous year 2015-
16:
a) Rs.5,000 received in India which accrued in Bangladesh.
b) Rs.10,000 earned in India but received in Sri Lanka.
c) Rs.8,000 earned and received in Japan from a business which was
controlled and managed from India.
d) Earned income of Rs.2,000 from house property in Pakistan which was
deposited in bank there.
e) Rs.6,000 earned in England and received there, out of which Rs.4,000
brought in India.
f) Foreign income of Rs. 4,000 which was earned in year 1990 was
brought in India during the previous year.
Compute Total Income of Shri Agrawal for the assessment year 2016-17 if
he is a:
(i) Resident; (ii) Not –ordinarily resident; and (iii) Non – resident.
19. Source Of income Resident
(Rs.)
Non-ordinarily
resident
(Rs.)
Non-
Resident
(Rs.)
(a)
(b)
(c)
(d)
(e)
Received in India but accrued in
Bangladesh
Earned in India but received in Sri
Lanka
Earned and received in Japan
(Business controlled from India
Income from house property in
Pakistan & deposited there
Earned in England but out of which
4,000 brought in India
5,000
10,000
8,000
2,000
6,000
5,000
10,000
8,000
----
----
5,000
10,000
----
----
---
Statement of Gross Total Income of Shri Agrawal
for the Assessment Year 2013-14
20. Example 3
The following are the incomes of Shri Sohan lal for the previous year:
Rs.
a) Rent received in Denmark from house property situated in Denmark 10,000
b) Salary received in India for service render in Japan 15,000
c) Income from business in England which is controlled from India 15,000
d) Passed untaxed foreign income which was brought in India 20,000
e) Profit earned in business at Kanpur 8,000
f) Salary received in Canada for the service rendered in India 4,000
Find out income covered in the scope of Income Tax of Shri Sohan lal for the
Assessment Year 2013-14, if he is
(i) A Resident (ii) Non-ordinarily resident (iii) and Non-Resident .
21. Source Of income Resident
(Rs.)
Non-ordinarily
resident
(Rs.)
Non-
Resident
(Rs.)
1.Income from salary:
(i) Received in India for the services in Japan
(ii) Received in Canada for the services in India
2. Income from House property:
Situated in Denmark
3. Income from Business:
(a) at Kanpur
(b) at England, controlled from India
4. Past untaxed foreign Income brought in India
15,000
4,000
10,000
8,000
15,000
-----
15,000
4,000
----
8,000
15,000
----
15,000
4,000
----
8,000
----
----
Statement of Gross Total Income of Shri Sohan Lal
for the Assessment year 2013-14
Income 52,0 00 42,000 27,000
22. Example 4
Following are the particulars of taxable income of Shri Madhusudan Garg for the
previous year ended 31st March, 2013:
a) Income from House Property in England Rs.2,00,000 which was deposited in a
bank in England and then Rs. 80,000 was remitted to India.
b) Income from business earned in Pakistan Rs.50,000 of which Rs. 30,000 were
received in India. This business is controlled from India.
c) Income from Sale of House Rajasthan Rs. 60,000. Half of this amount was received
in Canada.
d) Gift (mobile Set) in foreign currency Rs. 40,000 from a friend received in India.
e) Royalty received from Govt. of India Rs. 48,000.
f) Interest received from Shri Manish Agrawal, a non –resident against a loan
provided to him to run a business in India Rs. 10,000.
g) Income from investment in Japan Rs.20,000. This amount was received in Japan by
his authorized representative and sent to India through bank draft.
h) Income from business in India Rs.80,000. This business is controlled from England
Rs.40,000 were remitted to England.
i) Royalty received from Shri Manoj Kumar a resident for technical service provided
to run a business outside India Rs.40,000.
j) Past untaxed foreign income which was brought in India Rs 40,000.
23. S.
No
Source Of income Resident
(Rs.)
Non-ordinarily
resident
(Rs.)
Non-
Resident
(Rs.)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Income from House Property in England
which was deposited in a bank in England
Income from business in Pakistan controlled from
India:
(i) Received in India
(ii) Received in Pakistan
Income from Sale of House property in Rajasthan
Gift (mobile Set) from a friend , not income
Royalty received from Govt. of India
Interest from a non –resident for a loan provided
to run a business in India
Income from investment in Japan received also in
Japan by authorized representative
Income from business in India
Royalty from a resident for technical service
provided outside India
Past untaxed foreign income brought in India
2, 00,000
30,000
20,000
60,000
----
48,000
10,000
20,000
80,000
40,000
----
----
30,000
20,000
60,000
----
48,000
10,000
----
80,000
----
----
----
30,000
----
60,000
----
48,000
10,000
----
80,000
----
----
Statement of Gross Total Income of Shri Madhusudhan Garg for the
Assessment Year 2013-14
24. Very Short Answer Type Questions
• Explain any one basic condition for an
individual to become resident.
• Explain the basic conditions for a Hindu
Undivided Family to be treated as resident.
• When is a firm treated as non- resident?
• When is a company said to be resident in
India?
• What are various types of income?
25. Short Answer Type Questions
• How the residential status of all assessee other than individual is
determined?
• What do you understand by not – ordinarily resident in India?
• What is the relationship of tax liability and residential status?
• What do you understand by an income received in India?
• What do you mean by income deemed to be received in India?
• What do you understand by income accrued or arose in India?
• In what circumstances income of non-resident will be treated as aroused
in India, out of business connection from India and in what circumstances
income will not be treated as out of business connection from India?
• Mr. Amit, Who is a citizen of India went to London for first time on 20th
October, 2015 and did not return to India up to 31st March, 2016. Explain
his residential status for the assessment year 2016-17.
