Residential Status

The computation of the total income of any person depends on the Residential Status of such person as given hereunder.


On this page:

  1. Intro
  2. Special Category Individual?
  3. Basic Conditions
  4. Ordinarily Resident or Not Ordinarily Resident?
  5. Additional Conditions
  6. Scope of Total Income

Introduction

Residential Status of a person is of two categories, viz.,

  1. Resident and

  2. Non Resident.

However, in case of Individuals and Hindu Undivided Families (HUFs) the category Resident is divided into two, viz.,

  1. Resident and Ordinarily Resident and

  2. Resident but not Ordinarily Resident.

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Special Category Individual?

Step 1: Check whether the person is a special category Individual.

For determining the residential status the following individuals are given certain concessions while calculating the Residential Status (hereinafter termed as Special Category Individuals): -

  1. A Citizen of India who: -

    1. Leaves India as a member of the Crew of an Indian Ship, or

    2. Leaves India for taking employment outside India,

    3. Being outside India, comes on a visit to India,

  2. A Person of Indian Origin who being outside India, comes on a visit to India.

An Individual is deemed to be a Person of Indian Origin, only if he, or either of his parents or any of his grandparents, was born in Undivided India (before the partition of India).

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Determining Residential Status Basic Conditions

There are two basic Conditions to be fulfilled by the Individuals.

  1. Stays in India for period(s) of 182 days or more in the Previous Year.

  2. Stays in India for period(s) of 60 days or more in the Previous Year and 365 days or more in four previous years preceding the Previous Year.

Step 2: Whether "Special Category Individual" Satisfies the first Basic Condition (i.e., 182 day norms)?

If he doesn't satisfy the first basic condition (i.e. Stays in India for period(s) less than 182 days), then he will be treated as Non-Resident.

If he Satisfies the first basic condition, (i.e. Stays in India for period(s) of 182 days or more in the Previous Year), then he will be treated as Resident.

Step 3: If the person is NOT a "Special Category Individual" then check whether he Satisfies any one of the Basic Conditions.

If he Satisfies any one of the basic conditions, then he will be treated as Resident.

If he doesn't satisfy any one of the basic conditions, then he will be treated as Non-Resident.

  1. Neither he stays in India for period(s) of 182 days or more in the Previous Year, nor

  2. he stays in India for period(s) of 60 days or more in the Previous Year and 365 days or more in four previous years preceding the Previous Year.

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Ordinarily Resident or Not Ordinarily Resident?

Step 4:

In step 2 & 3, we have determined whether a person is Resident or Non-Resident.

If the person is a Non-Resident, then he need not pay any tax on Income accrues or arises outside India.

  1. From a business controlled or a profession set up in India

  2. Other Sources

If he is a Resident, then we have to determine whether he is a,

  1. Ordinarily Resident, or

  2. not Ordinarily Resident.

based on two additional conditions given below.

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Additional Conditions

  1. Is non-resident in at least 9 out of 10 Previous Years preceding the Previous Year?

  2. Has stayed for period(s) of 729 days or less in 7 Previous Years preceding the Previous Year?

Not Ordinarily Resident?

Step 5: Check whether the person satisfies at least any one of the two additional conditions.

If he satisfies, then he will treated as Resident but not Ordinarily Resident.

Ordinarily Resident?

If he doesn't satisfy any of the two additional conditions, then he will treated as Resident & Ordinarily Resident.

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Scope of Total Income

Sl. No. All incomes from any source derived in the Previous Year Resident* Resident but not ordinarily resident* Non-Resident
1. Received or deemed to be received in India, by him or on his behalf, not already taxed under sl. no. 2. below. Included Included Included
2. Accrues or arises or deemed to be accrue or arise in India. Included Included Included
3. Accrues or arises outside India from a business controlled or a profession set up in India. Included Included Not Included
Accrues or arises outside India from other Sources. Included Not Included Not Included

Note: In the table above the Resident column, in the case of Individuals and HUFs, refers to "Resident and Ordinarily Resident".

The status of "Resident but not ordinarily Resident" applies to only Individuals and HUFs.

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