residential status ppt.pdfnbugfghfthhjuuyt

Business

1. Person

1. Individual

Firm

Companies

. Institution

. Local Authorities
H.U.E

A.O.P

B.O.I.

SNAAAKRWHN

2. | Residential Status: SEC. 6 (1)

PP After determining the legal status of an Assessee
u/s. 2 (31) the Residential Status of an Assessee is
to be determined.

1. Determined of every PREVIOUS YEAR:

Residential Status is determined for every
previous year. It depends on the number of days
a person is in India during the concerned
‚previous year.

2. Different terms of Citizenship
An Individual may be a Citizen of Britain, but a
resident in India. In the same way a Citizen of
India may be a non-resident of India.

3. Residential Status is important in deciding whether
Foreign Income of a person is Taxable (or) not.

3. > Tax incidence of an assessee depends on his
residential status.

> For instance, whether an income, accrued to an
individual outside India, is taxable in India
depends upon the residential status of the
individual in India.

> Similarly, whether an income earned by a foreign
national in India (or) outside India is taxable in
India, depends on the residential status of the
individual, rather than on the _ citizenship.
Therefore, the determination of the residential
status of a person is very significant in order to
find out his tax liability.

4. Residential Status|

Resident Non-Resident|

\

| Not-ordinary
| Resident

Ordinary
Resident

5. Basic Conditions|
182 days (or) more 60 days (or) more
in the PY (201 na) QU in the PY (2017-18 |

4 PPYs
2016-17
2015-16
2014-15
2013-14 -

6. Additional conditions [Sec. 6(6)(a)]|

& To test as to when a resident individual is
ordinary resident in India (or) not

Additional Conditions |

| Resident in India }— av )—+ Stayed in India|
At least 2 out of | 730 days (or) more |
10 PPYs in the 7 PPYs |

LD 7PPYs = 2016-17 to 2010-11

(This means that the assessee must have satisfied at least one
of the basic condition for 2 years out of 10 PPYs)

7. Conditions to be satisfied|

& Resident — Satisfies any one of the basic condition.

+ Ordinary Resident — Satisfies any one of the basic
condition and both the additional conditions.

+ Not ordinary Resident — Satisfies any one of the
basic condition but does not satisfies one (or)
none of the additional conditions.

@ Non-Resident — Does not satisfies any of the
basic conditions.

8. Residential status in nutshell|

Status Basic Additional

condition conditions

Resident (R) Y —
Ordinary Resident (OR) Y Y
Not Ordinary Resident
(NOR) Y x
Non-Resident (NR) > =

v= Satisfies
>< = Does not satisfies
— = Not to consider

9. Residential Status of HUF |

The residential status of HUF depends upon the control
and management of its affairs.

Resident HUF: If the control and management of the affairs of
HUF is situated wholly or partly in India then HUF is said to
be Resident in India.

Non- Resident HUF: If the control and management of the
affairs of HUF is situated wholly outside India then HUF is
said to be Non- Resident in India.

Not Ordinarily Resident HUF: A resident HUF is said to be
‘Not Ordinarily Resident’ in India if Karta or manager
thereof, satisfies any of the additional conditions u/s 6(6).

10. Residential Status of Company

*According to section 6(3) an Indian
Company is always Resident in India.

+A foreign Company will be resident in
India if Control (or) Management of its
affairs is wholly situated in India.

11. Residential Status of Firm (or) AOP|

> Residential Status of a firm or AOP or other person
depends upon control and management of its
affairs.

> Resident: If the control and management of the affairs
of a firm or AOP or other person is situated wholly
or partly in India then such a firm or AOP or other
person is said to be resident in India.

> Non-Resident: If the control and management of the
affairs of a firm or AOP or other person is situated
outside India then such a firm or AOP or other
person is said to be non-resident in India.

12. Incidence of tax
(Scope of Total Income)

The tax is levied on total income of a person.
The total income is based upon the residential status
of an assessee.
The incidence of tax is —
& highest on Ordinary Resident (OR),
+ little lower on Not Ordinary Resident (NOR) and
$ lowest on Non-Resident (NR) assessees.

The scope of total income varies on the basis of status.
Scope of income = Indian Income + Foreign Income

13. Indian Income |

& Income earned in India;
@ Income accrues and arises in India;
* Income received (or) deemed to be received in India;

+ Income payable in India. (i.e., Income may have been
earned in foreign country but it is payable in India)

& Income earned (or) accrued in India but it is received
(or) payable outside India.
Foreign Income |
& Income earned (or) accrued outside India and also
received outside India;

Any income which is not earned (or) accrued or arises
in India.

14. Scope of income to Residents |

= Ordinary Resident [OR] = Indian income +
Foreign income

& Not Ordinary Resident [NOR]= Indian income
+ One particular type of foreign income

(i.e., business in foreign but controlled from India).

+ Non-Resident [NR]= Indian income only

15. Rules for determining the scope of total
income and incidence of tax:

1. Income received (or) deemed to be received in
India, whether earned in India (or) outside India.

2. Income accrued (or) deemed to accrue in India,
whether received in India (or) outside India.

3. Income received outside India from a business
(or) profession controlled from India.

4. Income received outside India from a business (or)
profession controlled from outside India.

5. Income received outside India from any other
source apart from business.

6. Income earned outside India in earlier years
brought to India in previous year
(Past untaxed profit).

x SS SIT SI
x XIX) NININ
XIXIXIXISIS

Nahe >< = Not Taxable