Income Tax Law & Practice
Residential Status
For an Individual
1. The person who fulfills one basic condition
and 2 additional conditions is called as
Ordinary Resident.
2. The person who fulfills one basic condition
and one additional condition is non ordinary
resident.
3. The person who is not liable for the basic
condition but additional conditions are either
fulfilled or not is called Non Resident of India.
Residential Status of H.U.F.
According to section 6 (2), there are following provisions for
the resident of the H.U.F.
Ordinary Resident
It is based on 2 provisions:
i) If the control and management of this family is done
from India,
ii) If the additional conditions are fulfilled by the Karta of
this family
Non-Ordinarily Resident
If the additional conditions are not fulfilled by the Karta.
Non- Resident
If the control and management of their affairs is done from
outside India, it is Non-Resident of India.
Residential Status of a Company
Resident
i) It is an Indian Company
ii) During the year, control, management and
place of effective management is India
Non-Ordinarily Resident
A company can never be non-ordinarily resident
Non-Resident
Company is not Indian company and its control
and management is done fully outside India.
Residential Status of Firm/A.O.P./ B.O.I.
Resident
If the control and management is done from India,
then it is a resident
Non-Ordinarily Resident
No such condition for Firm/ A.O.P./ B.O.I.
Non-Resident
If the control and management is done outside
from India, the it is non-resident
Tax Incidence in brief (Whether taxable or not)
Income Resident Non-Ordinarily Non-Resident
Resident
Income received or Taxable Taxable Taxable
deemed to receive
in India in Previous
Year
Accrued income Taxable Taxable Taxable
and deemed to
accrued income in
India in P.Y.
Income received Taxable Taxable Tax free
outside from India
Income received Tax free Tax free Tax free
but controlled
outside from India
Question 1
Shri Om Prakash, an Indian citizen was born in
U.K. He came to India, when he was of 12 years
and went outside India for the first time when he
was 25 years of age. He left for U.K. in May 2014
and again came back to India in March 2017.
What is the residential status for assessment year
2017-18?
Question 2
Shri Ramesh was born and brought up in India,
went further to U.K. on 1ST March, 2015 and
came back to India on 1st October, 2016 early in
the morning.
Find the residential status for the assessment
year 2017-18.
Question 2
For the Assessment year 2017-18
Stayed in India during the previous year 2016-17
31+30+31+31+28+31= 182 days
(First basic condition satisfied). Hence he is resident.
For determining whether he is ordinary resident , we shall
see his status during preceding 10 years as under-
Preceding previous year (2015-16) : He was non-resident
because he was not in India at all during the year.
Preceding year (2014-15): He was resident, as he
left India on March 1st, 2015
Preceding year (2013-14): He was resident as he
was in India throughout.
He was resident for 2 years in preceding 10 years.
He has been for more than 730 days in preceding
years. Therefore, he is resident and ordinarily
resident for the assessment year 2017-18.
Question 3
Mr. AB a foreign citizen leaves India for the first
time in the last 20 years on November 20, 2014.
During the calendar year 2015, he came in India
on September 1 and stayed for a period of 30
days. During the calendar year 2016; he did not
visit India at all. He came to India on January 16,
2017 and did not left thereafter. Determine the
residential status of Mr. AB for the Assessment
year 2017-18, if a) he is Indian origin, b) he is not
an Indian origin
