Residential Status

Residential Status

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Residential Status

Residential status is the status that an assessee has been given as per the Income Tax Department so as to decide which income shall be taxable in his hands and which will not be taxable.

Residential Status for Individuals

An Individual would qualify as a Resident of India in any previous year if

  • Individual is a citizen of India and leaves India in the previous year as a member of the crew of an Indian ship and was in India for a period of 182 days or more.
  • Individual is a citizen of India or a person of Indian origin and has come on a visit to India in the previous year and is in India for a period of 182 days or more.
  • In any other case:

o   is in India for a period or periods amounting in all to 182 days or more in the previous year or

o   In the preceding 4 years relevant to previous year was in India for a period or periods amounting in all to 365 days or more and for the previous year for a period or periods amounting in all to 60 days or more.

Note:

1)     For the purposes of this clause, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, not include “the period beginning on the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage”.

2)     “eligible voyage” shall mean a voyage undertaken by a ship engaged in the carriage of passengers or freight in international traffic where—

o   for the voyage having originated from any port in India, has as its destination any port outside India; and

o   for the voyage having originated from any port outside India, has as its destination any port in India.]

Resident But Not Ordinarily Resident In India

An individual is said to be Resident but Not Ordinarily Resident if any of the two conditions are fulfilled.

  • First, if he has been a non-resident in India in nine out of the 10 preceding financial years or,
  • Second, if during the preceding seven financial years he has been in India for 729 days or less.

Residential Status for Hindu Undivided Family (HUF)

HUF, is said to be resident in every case except where during that year the control and management of its affairs is situated wholly outside India. It means that if a HUF is controlled from India even partially it will be resident assessee. If control is wholly from outside India HUF would be Non-Resident.

 HUF will be ‘Not Ordinarily Resident’ if Karta of HUF is Not Ordinarily Resident.

Residential Status for Firms And Association of Person (AOP)

A firm or AOP is said to be resident in case where control and management of its affairs is situated wholly or partially in India.

It means if control is wholly from outside India Firm/AOO would be Non-Resident.

Residential Status for Companies

 A company is said to be a resident in India in any previous year, if—

  • it is an Indian company; or
  • its place of effective management, in the previous year, is in India.

Explanation.—For the purposes of this clause “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made.

There are various Guiding Factors available for deciding as to what will be the Place of Effective Management.

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