1. Residential status Section 6 lists the provisions regarding residential status. Why residential status is important? The residential status determines the taxability of various income. E.g. income earned outside India will not be taxed in case of a non-resident while such income would be taxable in the hand of a resident and ordinarily resident. CA Siddharth Ranjan 1

2. Residential status Resident(R) Not Ordinarily Resident (NOR) Non-Resident (NR) Types of Residential Status CA Siddharth Ranjan 2

3. Residential Status of an Individual Sec 6(1) & 6(6) The residential status of individual will be determined as under- CA Siddharth Ranjan 3

4. Residential Status of an Individual (contd.) Basic Conditions u/s 6(1): existence in India for a period of 182 days or more during the previous year; or existence in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year. Additional Conditions u/s 6(6): He must be a non-resident in India in nine out of the ten previous years preceding that year; or He must be in India during 7 preceding previous years for aggregate period of 729 days or less. CA Siddharth Ranjan 4

5. Residential Status of an Individual (contd.)Indian citizens leaving India for employment or as a member of crew of an Indian ship. CA Siddharth Ranjan 5

6. Residential Status of an Individual (contd.) As per the explanation (a) added to sec 6(6) in such cases 182 days will be substituted for 60 days in the second condition so effectively that would become: ii) existence in India for a period of 182 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year. CA Siddharth Ranjan 6

7. Residential Status of an Individual (contd.)when an Indian citizens or a PIO comes on a visit to india CA Siddharth Ranjan 7

8. Residential Status of an Individual (contd.) As per the explanation (b) added to sec 6(6) in such cases 182 days will be substituted for 60 days in the second condition so effectively that would become: ii) existence in India for a period of 182 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year. CA Siddharth Ranjan 8

9. Residential Status of HUF Resident HUF: If the control and management of the affairs of HUF is situated wholly or partly in India then HUF is said to be Resident in India. Non- Resident HUF: If the control and management of the affairs of HUF is situated wholly outside India then HUF is said to be Non- Resident in India. Not Ordinarily Resident HUF: A resident HUF is said to be ‘Not Ordinarily Resident’ in India if Karta or manager thereof, satisfies any of the additional conditions u/s 6(6). Sec 6(2) & 6(6) The residential status of HUF depends upon the control and management of its affairs. CA Siddharth Ranjan 9

10. Remember Incase of all other persons – they can either be residents or Non-Resident (NR) Only an individual or a HUF can be Resident but Not Ordinarily Resident (NOR) CA Siddharth Ranjan 10

11. Residential status of a Company An Indian Company is always Resident in India. A foreign Company will be resident in India if Control or Management of its affairs is wholly situated in India. section 6(3) CA Siddharth Ranjan 11

13. Non-Resident: If the control and management of the affairs of a firm or AOP or other person is situated outside India then such a firm or AOP or other person is said to be non-resident in India.depends upon control and management of its affairs. CA Siddharth Ranjan 12

14. Incidence of Tax CA Siddharth Ranjan 13

15. Residential status & Note: As per the proviso to sec 5(1) (c) :In case of R-NOR, the income which accrues or arises to her outside India shall not be included in taxable income provided it is not derived from a business controlled in or a profession set up in India. Scope of total income: Section 5 CA Siddharth Ranjan 14