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When an individual is said to be resident in India?
An individual is said to be resident in India if he satisfies any one of the following two conditions:

• He is in India for a period or periods amounting in all to 182 days or more in the relevant previous year; or

• He is in India for 60 days or more during the relevant previous year and has been in India for 365 days or more during 4 previous years immediately preceding the relevant previous year.

Concession in certain cases:
There are two concession given to following persons:

• In case of an individual, who is a citizen of India and who leaves India in any previous year for the purpose of employment outside India, the period of 60 days, in condition No. 2, supra, shall be substituted by 182 days i.e., he shall not be a resident of India unless his stay in India is at least 182 days during the relevant previous year in which he leaves India.

Similarly in case of an individual who is a citizen of India and who leaves India in any previous year as a member of the crew of an Indian ship, the period of 60 days will be substituted by 182 days.

• In case of an individual, who is a citizen of India, or is a person of Indian origin, who, being outside India, comes on a visit to India in any previous year, the period of 60 days in the second condition given above, will be substituted by 182 days i.e., he shall not be a resident unless his stay in India is at least 182 days during the relevant previous year in which he visits India.

Question: A citizen of USA has been staying in India since 1984. He leaves India on 16-7-2007 on a visit to USA and returns on 4-1-2008. Determine his residential status for the previous year 2007-08.

When an individual is said to be resident and ordinarily resident in India?
An individual who is resident in India, shall be resident and ordinarily resident in India if he satisfies both the following conditions:

(a) He has been resident in India for at least 2 out of 10 previous years immediately preceding the relevant previous year. This means that he must have satisfied any one of the conditions, with exceptions (given above) for being a resident for at least 2 out of 10 previous years immediately preceding the relevant previous year.
(b) He has been in India for 730 days or more, during seven previous years immediately preceding the relevant previous year.



When an individual is said to be resident but not ordinarily resident in India? [Section 6(6)(a)]: An individual who is resident in India is said to be "not ordinarily resident in India" if he does not satisfy any or both of the conditions mentioned in clause (a) and (b) in the same para above.



When an individual is said to be non-resident in India [Section 2(30)] An individual is said to be a non-resident, if he is not a resident in India.


Question:Indian citizen and businessman Shri Raj Gopal, who resides in Jaipur, went to Germany for employment purposes on 15-8-2007 and came back to India on 10-11-2008. He has never been out of India in the past.

• Determine residential status of Shri Raj Gopal for the assessment year 2008-09.
• Will your answer be different if he had gone on a leisure trip?

Question: Mr. Border, an Australian cricketer has been coming to India for 100 days every year since 1995-96:

• Determine his residential status for the assessment year 2008-09.
• Will your answer be different if he has been coming to India for 110 days instead of 100 days every year.
  

• Question: X came to India from America for the first time on 2-10-2006. He returned to his home country after staying in India upto 28-9-2007. Will he be a resident in India for the assessment years 2007-08 and 2008-09?
  

When is HUF said to be a resident in India?
A HUF is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.


When is HUF said to be a Non-Resident?
A HUF is said to be non-resident in India if during the previous year, the control and management of its affairs is situated wholly outside India.

In other words it will be non-resident in India if no part of the control and management of its affairs is situated in India.

Control and management refers to the decisions taken regarding affairs of the HUF. The control and management lies at the place where decisions regarding the affairs of the HUF are taken.

Once the HUF is a resident in India, it is to be further determined whether it is:

• resident and ordinarily resident in India; or
• resident but not ordinarily resident in India.
  

When is HUF said to be a resident and ordinarily resident in India?
The HUF shall be said to be resident and ordinarily resident in India if the karta of the HUF satisfies both the following conditions:

(a) He (Karta) must be resident in at least 2 out of 10 previous years immediately preceding the relevant previous year; and

(b) He must be in India for at least 730 days during 7 previous years immediately preceding the relevant previous year.


When is HUF said to be resident but not ordinarily resident in India? [Section 6(6)(b)]: A HUF, which is resident in India, is said to be resident but not ordinarily resident in India during the relevant previous year, if the manager (Karta) of the HUF does not satisfy any one, or both, of the conditions mentioned in clause (a) and (b) above.


These entities may either be resident or non-resident in India for any previous year.

When is a Firm, AOP, BOI, etc. said to be resident in India?
A firm, AOP, etc. is said to be resident in India in any previous year in all cases except where during that year the control and management of its affairs is situated wholly outside India. In the case of a firm, the control and management is in the hands of the partners and therefore, if the partners generally meet in India regarding the affairs of the firm, then the firm is said to be resident in India.

When is a Firm, AOP, BOI, etc. said to be Non-Resident in India?
If the control and management of the affairs of these entities is wholly out of India during the relevant previous year then they are said to be non-resident. In other words, to be Non-Resident, no part of the control and management should be in India.



When is a company said to be resident in India?
A Company is said to be a resident in India in any previous year if:

• it is an Indian company, or
  
• during the relevant previous year, the control and management of its affairs is situated wholly in India.
  

When is a company said to be Non-resident in India?
A Company will be a non-Resident in any previous year if:

• it is not an Indian company; and
  
• the control and management of its affairs is situated wholly or partially outside India.

Question 1: R was born on 5th April, 1995 in India & he later on took the citizenship of U.S.A. Neither his parents nor his grand parents were born in divided/undivided India. R in this case shall be:

• Citizen of India
• Person of India origin
• A foreign national

Question 2 : Determine the residential status of the following: -

• R a person of Indian origin visited India on 3-10-2007 and plans to stay here for 185 days. During 4 years prior to previous year 2007-08, he was in India for 750 days. Earlier to that he was never in India. For assessment year 2008-09, R shall be?

• R, a citizen a India is employed on an Indian ship. During the previous year 2007-08 he leaves India for Germany on 15-9-2007 for holidays and returned on 1-4-2008. He had been non-resident for the past 3 years. Earlier to that he was permanently in India. For assessment year 2008-09, R shall be?

• R Ltd., is registered in U.K. The control and management of its affairs is wholly situated in India. R Ltd., shall be?

• R, a foreign national but a person of Indian origin visited India during previous year 2007-08 for 181 days. During 4 preceding previous years he was in India for 400 days. R shall be?
  

Question 3 : State True and False

• An Indian company is always resident in India.
• A foreign company in always non-resident in India.
• Salary payable by a company to an Indian citizen for services rendered outside India is an income which is deemed to accrue or arise in India.
• Salary payable by the Government to an Indian citizen who is non-resident in India for service rendered outside India is not taxable in India.
  

Question 4 : Dividend paid by an Indian company outside India is:

• taxable in India in the hands of the recipient
• exempt in the hands of recipient
• taxable in the hands of the company and exempt in the hands of the recipient
  

Question 5 : 'U' was born in 1975 in India. His parents were also born in India in 1948. His grand parents were, however, born in England. 'U' was residing in India till 15-3-2005. Thereafter, he migrated to England and took the citizenship of that country on 15-3-2007. He visits India during 2007-08 for 90 days. Determine the residential status of 'U' for assessment year 2008-09.


Question 6 : Mr. Kohli, a citizen of India, is an export manager of Arjun Overseas Limited, an Indian Company, since 1-5-2003. He has been regularly going to USA for export promotion. He spent the following days in U.S.A. for the last five years:

Previous year ended No. of days spent in USA
31-3-2004 319 days
31-3-2005 150 days
31-3-2006 270 days
31-3-2007 310 days
31-3-2008 295 days


Determine his residential status for assessment year 2008-09 assuming that prior to 1-5-2003 he had never traveled abroad.


Determine the residential status in the following cases for the assessment year2008-09:

• The control and management of a HUF is situated in India. The manager of the H.U.F. visited England with his wife from 14-8-2007 to 30-6-2008. Earlier to that he was always in India.
• A company, whose registered office is in America, is partly controlled and managed from its branch established in India.
• In a partnership firm, there are three partners namely A, B and C. A and B reside in India while C lives in Germany. The firm is fully controlled by C. During the previous year, Mr. C stayed for 6 months in India.
• A V.I.P. Club is in India, whose director Mr. X belongs to China. The Club is controlled fully by Mr. X. In the previous year. Mr. X did not come for a single day to India.
  

Question 7 : Determine the taxable income in the following cases:-