Res Status MBA(1)
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Transcript of Res Status MBA(1)
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RESIDENTIAL STATUS
ANDTAX INCIDENCE
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Tax incidence on an assessee depends on his
residential status.
For instance, whether an income, accrued to anindividual outside India, is taxable in India depends upon
the residential status of the individual in India.
Similarly, whether an income earned by a foreignnational in India (or outside India) is taxable in India,
depends on the residential status of the individual, rather
than on his citizenship. Therefore, the determination of
the residential status of a person is very significant in
order to find out his tax liability.
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WHAT MUST ONE KNOW FOR
DECIDING RESIDENTIAL STATUS
Different taxable entities
An individual;
A Hindu Undivided Family(HUF); A firm or an Associations Of Persons (AOP);
A Joint Stock Company;&
Every other person.
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DIFFERENT RESIDENTIAL
STATUS:
FOR INDIVIDUAL ANDA
HINDU UNDIVIDED
FAMILY
ALL OTHER ASSESSEES (A
FIRM,AN ASSOCIATION OF
PERSONS,A JOINT STOCK
COMPANY& EVERY OTHER
PERSON)
Resident and ordinarily
Resident in India
Resident but not
ordinarily resident inIndia ; or
Non-resident in India.
Resident in India; or
Non-resident in India.
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HOW TO DETERMINE THE
RESIDENTIAL STATUS OF THE
INDIVIDUAL
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STEP 1 First find out whether such
individual is Resident in India
STEP 2 If such individual is Resident in
India, then find out whether he is
ordinarily resident in India.
However, if such individual is a
Non-resident in India, then nofurther investigation is necessary.
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BASIC CONDITIONS TO TEST AS TO
WHEN AN INDIVIDUAL IS RESIDENT
BASIC CONDITION (A)
He is in India in the
previous year for a
period of 182 days or
more
BASIC CONDITION (B)
He is in India for a period
of 60 days or more during
the previous year and
365 days or more during
4 years immediatelypreceding the previous
year
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EXCEPTIONS
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WHO CAN TAKE THE BENEFIT
OF EXTENDED PERIOD
EXTENDED PERIOD
An Indian citizen who
leaves India during the
previous year for the
purpose of employmentoutside India or an Indian
citizen who leaves India
during the previous year as
a member of the crew of an
Indian ship
182 days
Indian citizen or a person of
Indian origin who comes on
a visit to India during the
previous year
182 days
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CONDITIONS TO TEST AS TO WHEN A
RESIDENT INDIVIDUAL IS ORDINARILY
RESIDENT IN INDIA
Additional
Condition 1
He has been resident in India in
atleast 2 out of 10 previous years
immediately preceding the relevant
previous year
Additional
Condition 2
He has been in India for a period of
730 days or more during 7 years
immediately preceding the relevant
previous year
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CONDITIONS TO TEST AS TO WHEN A
RESIDENT BUT NOT ORDINARILY
RESIDENT [SEC. 6(1), (6) (A)]
Case 1 If he satisfies at least one of the
basic conditions, but none of theadditional conditions
Case 2 If he satisfies at least one of the
basic conditions AND one of thetwo additional conditions
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NON - RESIDENT
An individual is a Non-Resident
in India if he satisfies none ofthe basic conditions. In the case
of non-resident; additional
conditions are not relevant.
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RESIDENTIAL
STATUS OF A HUF
[SEC 6 (2)]
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RESIDENTIAL STATUS OF A HUF Hindu Undivided Family can either be Resident or a Non Resident in India.
Like an Individual, HUF can also be ROR, RNOR or a Non Resident.
Following are the conditions when a HUF can either be a Resident or Non
resident:-
Situation I: HUF qualifies as a RESIDENT
Basic Condition The Control and Management of
affairs of the HUF is wholly
or partly situated in India.
Situation II: HUF qualifies as a NON-RESIDENT
Basic Condition The Control andManagement
of affairs of the HUF is totally
Outside India
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WHEN A RESIDENT HUF ISWHEN A RESIDENT HUF IS
ORDINARILY RESIDENT INORDINARILY RESIDENT IN
INDIAINDIA
Additional
Condition (i)
Karta has been resident in India in at least 2
out of 10 previous yrs immediately preceding
the relevant previous yrs
Additional
Condition (ii)
Karta has been present in India for a period of
730 days or more during 7 yrs immediately
preceding the relevant previous yrs
IF KARTA OR MANAGER OF RESIDENT HUFDOES NOT SATISFY THE TWO
ADDITIONAL CONDITIONS, THE FAMILY IS
TREATEDAS RESIDENT BUT NOT
ORDINARILY RESIDENT IN INDIA
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RESIDENTIAL STATUS OF FIRMRESIDENTIAL STATUS OF FIRM
AND ASSOCIATION OFAND ASSOCIATION OF
PERSON [SEC 6 (2)]PERSON [SEC 6 (2)]
Place of Control Residential Status OfFamilyWholly in India
Wholly Out of India
Partly in India and partly
outside India
Resident
Non-Resident
Resident
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RESIDENTIAL STATUS OFRESIDENTIAL STATUS OF
EVERY OTHER PERSON [SEC.EVERY OTHER PERSON [SEC.
6(4)]6(4)]
Every other person is resident in India if
control and management of his affairs is,
wholly or partly, situated within India
during the relevant previousyear. On the
other hand, every other person is non-resident in India if control and
management of its affairs is wholly
situated outside India.
