The first step towards tax filing is to get sure of your residential status. For a particular financial year (F.Y.) you could be an Ordinarily Resident, Resident but Not Ordinarily Resident or Non Resident in India.
Without taking help of anyone you can find this status and go forward accordingly.
BASIC CONDITIONS to test whether you are a resident in India
Under section 6(1) an individual is said to be resident in India in any previous year, if he satisfies at least one of the following basic conditions —
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Basic condition (a)
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He is in India in the previous year for a period of 182 days or more
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Basic condition (b)
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He is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year
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Note: In the following case, an individual has to satisfy ‘Basic condition (a)’ in order to become resident in India:
An Indian citizen who leaves India during the previous year for the purpose of taking employment outside India or an Indian citizen leaving India during the previous year as a member of the crew of an Indian ship.
If an individual does not satisfy any of the above two basic conditions, he will be treated as Non Resident in India.
ADDITIONAL CONDITIONS to test as to when a resident individual is ordinarily resident in India
Under section 6(6), a resident individual is treated as “Resident and Ordinarily Resident” in India if he satisfies the following two additional conditions —
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Additional condition (i)
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He has been resident in India in at least 2 out of 10 previous years [according to basic condition noted above] immediately preceding the relevant previous year.
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Additional condition (ii)
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He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.
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RESIDENT BUT NOT ORDINARILY RESIDENT
As per section 6(1), an individual who satisfies at least one of the basic conditions [i.e., condition (a) or (b)] but does not satisfy both or one of the two additional conditions [i.e., conditions (i) and/or (ii)], is treated as a Resident but Not Ordinarily Resident in India.
In other words, an individual becomes resident but not ordinarily resident in India in any of the following circumstances:
Case 1: If he satisfies at least one of the basic conditions [i.e., condition (a) or (b)] but none of the additional conditions [i.e., (i) and (ii)]
Case 2: If he satisfies at least one of the basic conditions [i.e., condition (a) or (b)] and one of the two additional conditions [i.e., (i) or (ii)]
If Income is not received (or not deemed to be received) in India; and Income does not accrue or arise (or does not deemed to accrue or arise) in India, then such income is “foreign income”, otherwise you can consider that as Indian income.
INCIDENCE OF TAX FOR DIFFERENT TAXPAYERS
Tax incidence of different taxpayers is as follows—
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Individual and Hindu undivided family
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Resident and Ordinarily Resident in India
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Resident but not Ordinarily Resident in India
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Non-Resident in India
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Indian income
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Taxable in India
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Taxable in India
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Taxable in India
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Foreign income
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– If it is business income and business is controlled wholly or partly from India
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Taxable in India
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Taxable in India
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Not taxable in India
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– If it is income from
profession which is set up in India
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Taxable in India
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Taxable in India
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Not taxable in
India
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– If it is business income and business is controlled from outside India
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Taxable in India
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Not taxable in India
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Not taxable in India
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– If it is income from profession which is set up outside India
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Taxable in India
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Not taxable in India
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Not taxable in India
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– Any other foreign
income (like salary, rent, interest, etc.)
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Taxable in India
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Not taxable in India
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Not taxable in India
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If you have any specific query related to this please leave a comment. Your feedback is always welcome.
