By-

Taxation Law Prof.(Dr.)Navneet Joshi

Professor
UNIT –1 JIMS,Rohini,Delhi
 RESIDENTIAL STATUS AND
TAX INCIDENCE
Introduction

Residential Status
The residential status of a person as referred in Sec. 2(31) of the Act. for
each assessment year under consideration to determine the scope of total
income.
Importance-
Total income of an assessee cannot be determined without knowing his
residential status.
The residential status shall be determined for every person for each
previous year independently.
The onus of responsibility to prove the residential status is on the
assessee.
 RESIDENTIAL STATUS OF INDIVIDUALS
[SEC.6 (1)]

Residential Status – Classification

Resident Non-Resident (NR)

Resident or Resident but

Ordinarily Not Ordinarily
Resident Resident
(OR) (NOR)
 Basic Conditions:

(a) If an Individual stayed in India for a period of 182 days or more

during the relevant previous year (RPY 23-24) He/she is Resident of
India .
(OR)
(b) If He/She stayed in India for a period of 60 days or more during
relevant previous year (RPY) and 365 days or more during the four
preceding previous years (22-23, 21-22,20-21,19-20) He/She is Resident of
India.
If the above two conditions any on eis not satisfied, He/She is Non-
Resident.

Note: The day on which He/She enters India as well as the day on which He/She leaves India shall
be taken into account as the stay of the Individual in India.
 Special Exception Situations:

For the following persons, condition mentioned in 1(a) above only shall
apply to determine their Residential Status

❑ Individual, Indian citizen, leaves India for employment outside

India,
or
❑ Indian Citizen being a crew member of an Indian ship leaves India,
or
❑ Individual, Indian citizen or person of Indian origin, who is residing
outside INDIA, visiting India.
 Additional Conditions:
Sec. 6(6) (a)

1. Resident in India( any basic condition fulfilled ) for at least 2 years out of
the preceding 10 previous years.
(22-23, 21-22,20-21,19-20,18-19,17-18,16-17,15-16,14-15,13-14)

2. Physically present in India for at least 730 days during the 7 preceding
previous years.
(22-23, 21-22,20-21,19-20,18-19,17-18,16-17)
 Status of an Individual

Status of an Individual Basic Additional

condition condition/(s)
Resident and ordinarily Resident Satisfies Satisfies both the
conditions
Resident but Not ordinarily Satisfies May or may not
Resident (NOR) satisfy any of the
additional condition
Non Resident (NR) Fails to satisfy Not required to check
 Residential Status of
HUF/Firm/AOP/every other Person
[Sec. 6(2), SEC.6 (4)]

Control and Management is Residential Status

Wholly or partly in India Resident

Wholly outside India Non-resident

 Residential status of a company
[SECTION 6 (3)]

Status of an Individual Residential Status

Indian Company Resident
Other Companies - Control and management is Resident
(a) Wholly in India
(b) Wholly or partly outside India Non-resident
 STATUS AND INCIDENCE OF
INCOME-TAX

The incidence of tax on a tax-payer depends on his residential status

as well as on the place and time of accrual or receipt of income. A
suitable table is given below:
Tax incidence in case of
S.No. Particulars of Income Resident Resident Non-
but but Not Resident
Ordinarily Ordinarily
Resident Resident
1 Income due and received in India YES YES YES
2 Income due in India but received outside India YES YES YES
OR Income received in India but due outside India
3 Business controlled from India YES YES NO
4 Income due and received outside India YES NO NO
Total Taxable Income 1 to 4 1 to 3 1 to 2
5 Past untaxed Income NO NO NO
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 1(A)

X, after 30 years’ stay in India, returns to America on January 29, 2021.

He returned to India in June 2024 to join an American company as its
overseas branch manager. Determine his residential status for the
assessment year 2024-25.
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Solution 1(A)
1April 2023 – 31st March 2024(RPY)
Days stay in INDIA (2023-24) = Zero days
Basic condition – fail to satisfice
Additional condition – need not to check
Residential Status of X – Non Resident for the assessment year 2024-25
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 1(B)

X, after 30 years’ stay in India, went to America on January 29, 2022.

He returned to India in 1st Jan. 2024 to join an American company as its
overseas branch manager. Determine his residential status for the
assessment year 2024-25.
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE
Solution 1(B)

1April 2023 – 31st March 2024(RPY)

Days stay in INDIA (2023-24) = 91 Days (31January +29February +31March)
4 Years before the RPY
(22-23+21-22+20-21+19-20) = More then 365 days
( zero + 303 + 365 + 365) = 1033

Basic condition – satisfied ( 2nd condition)

Additional condition – satisfied*
Residential Status of X = Ordinary Resident for the assessment year
2023-24

*As he was in India for more then 30 year ( before 29 January 2022)
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 2.

Indian citizen and businessman Shri Hari, who resides in Kolkata, went
to France for employment purposes on 15.8.2023 and came back to India
on 10.11.2023. He has never been out of India in the past.
(a) Determine residential status of Shri Hari for the assessment year
2024-25.
(b) Will your answer be different if he had gone on a leisure trip?
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE
Solution 2
(a) Shri Hari went out side for employment purpose, he need to satisfy
basic condition 1 ( 182 days in RPY 2023-24)
His stay in India April + May + June + July +August
(30 + 31 + 30 + 31 + 15 ) =137days
Fails to satisfy basic condition
His residential status = Non Resident ( in the AY 2024-25)

(b) Will your answer be different if he had gone on a leisure trip?

Basic condition satisfy ( 60 days in RPY +365 days in the 4 year
before the RPY)
Additional Condition = Satisfy *as he was in India in past years
His residential status = Resident (in the AY 2024-25)
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 3 (A)

B’, an Indian citizen had left India for the first time on 31.3.2023 for
employment in Denmark. During the previous year 2023-24 he came
back to India and stayed for 150 days. Determine the residential status of
‘B’ for assessment years 2024-25.
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 3 (B)

‘B’, a person of Indian origin staying in Denmark. During the previous

year 2023-24 he came to India and stayed for 190 days. Determine the
residential status of ‘B’ for assessment years 2024-25.
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE

Problem 3 (C)

‘B’, an Indian citizen had left from India for the first time on 21.9.2022
he went to Denmark. During the previous year 2023-24 he came back to
India on 1 September 2023. Determine the residential status of ‘B’ for
assessment years 2024-25
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE
Problem 4.
Subhash discloses following particulars of his receipts during the
Previous Year 2023-2024:
Salary income earned at Pune but received in Srilanka 2,50,000
Profits earned from a business in Kenya which is controlled in India, half of the 2,20,000
profits being received in India
Income from property, situated in Nairobi and received there 75,000
Income from agriculture in Bangladesh and brought to India 68,000
Dividend-paid by an Indian company but received in London on 15 May 2023. 5,000
Interest on USA Development Bonds and one half of which was received in India 44,000
Past foreign untaxed income brought to India 2,10,000
Gift of from father, settled in USA, received in India 1,000
cont….
 CASES ON RESIDENTIAL
STATUS AND TAX
INCIDENCE
Land sold in Delhi, consideration received in Canada, resulting into capital gain 2,50,000
Income from structure-designing consultancy service, set up in Germany, controlled 4,00,000
from India, profits being received outside India
Income from foreign business, controlled from India, 2,00,000
Determine his taxable income for the previous year 2023-2024 if he is
(i) Resident (OR)
(ii) Resident but Not Ordinary Resident, (NOR)
(iii) Non-Resident.(NR)

Note :- Dividends declared and distributed on or after April 1, 2020 are taxable in the hands of
recipient shareholders. Such dividend income is subject to 10% TDS, if amount received exceeds Rs
5,000 in a year.
Practical Question 1
Practical Question 2
Practical Question 3
Practical Question 3 cont..
Practical Question 4
Practical Question 4 cont …
Practical Question 5
During the PY 2021-22 following are the income

(a) Salary Income received in INDIA for services rendered in Hong Kong 3,90,000
Feel free to contact :-
[email protected]

Dr.Navneet Joshi
Professor
JIMS, Rohini, Delhi

face book & Lingdin link :-

[email protected]