1. Residential Status of Individual
As per section 6(1) of Income Tax Act, if an Individual satisfies any of the following conditions, then he is said to be Resident in India.
Condition 1 - He has been in India during the previous year for a total period of 182 days or more, or
Condition 2 - He has been in India during the 4 years immediately preceding the previous year for a total period of 365 days or more and has been in India for at least 60 days in the previous year.
If both conditions are not satisfied, then he is a non-resident.
Exceptions
The following category of Individuals will be treated as resident in India only if the period of their stay during the relevant previous year amounts to 182 days. It means the condition of 60 days or more in previous year and total period of 365 days in preceding 4 years is not applicable to following type of persons:
(i) Indian citizens, who leave India during the previous year as a member of the crew of an Indian Ship or for purposes of employment outside India, or
(ii) Indian citizens or person of Indian origin engaged outside India in an employment or a business or profession or in any other vocation, who comes on a visit to India in any previous year.
According to Rule 126 of Income Tax Rules, 1962, for the purposes of section 6(1), in case of Individual, being a citizen of India and a member of the crew of a ship, the period or periods of stay in India shall, in respect of eligible voyage, not include the following period:
Period commencing from the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and the period 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.
Eligible Voyage means a voyage undertaken by a ship engaged in the carriage of passengers or freight in International Traffic where
i) for the voyage having originated from any port in India, has its destination any port outside India and
ii) for the voyage having originated from any port outside India, has its destination any port in India.
Resident and Ordinarily Resident/ Resident but not Ordinarily Resident
Only Individual and HUF can be resident but not ordinarily resident in India. All other classes of assessee can be either resident or non-resident.
If any of the following conditions is satisfied, then such person is deemed to be Not Ordinarily Resident:
i) If such Individual has been non-resident for 9 years out of previous 10 years preceding the relevant previous year. or
ii) If such Individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less.
2. Residential Status of HUF
If Karta of resident HUF satisfies both the following additional conditions, then resident HUF will be Resident and Not Ordinarily Resident:
i) If such Individual has been non-resident for 9 years out of previous 10 years preceding the relevant previous year. or
ii) If such Individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less.
3. Residential Status of Firms and Association of Persons (AOP)
i) A firm or AOP is resident in India if control or management of its affairs is situated wholly or partially in India.
ii) A firm or AOP is non-resident if control or management of its affairs is situated wholly outside India.
4. Residential Status of Companies
A company would be resident in India in any previous year, if-
(i) it is an Indian Company or
(ii) its place of effective management (POEM), in that year, is in India.
POEM - to mean 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.
5. Residential Status of Local Authorities and Artificial Judicial Persons
i) Local authorities and artificial judicial persons would be resident in India if the control and management of its affairs is situated wholly or partly in India.
ii) Local authorities and artificial judicial persons would be non-resident if the control and management of its affairs is situated wholly outside India.
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