The liability to pay tax on any person depends upon his residential status under the Income Tax Act, 1961. For determining the residential status, the taxpayers are classified into three broad categories:-
- Resident and Ordinarily Resident [ROR]
- Resident but not Ordinarily Resident [RNOR]
- Non- Resident [NR]
Which section governs Residential Status ?
How to determine Residential Status ?
Let us study Residential Status of Individual
As per section 6(1) of the Income Tax Act, 1961, an Individual is said to be resident in India in any previous year, if that person satisfies any one of the following conditions:
1. He stays in India for 182 days or more during the previous year,
2. He stays in India for at least 60 days or more during the previous year
Total stays in India for 365 days or more in the last 4 years, i.e. preceding the previous year.
If the individual satisfies any one of the following above two conditions mentioned above, then he is a “Resident” in India but if both of the above conditions are not satisfied then he is a “Non- Resident”.
Condition number two is not applicable for the following:
1. Citizen of India who leaves India during the relevant previous year as a member of Crew of an Indian Ship or for employment purpose outside India;
2. Citizen of India or person of Indian origin (PIO)* – Who comes to India for Visit during the relevant previous year.
*Person of Indian Origin (PIO): A Person is said to be of Indian origin if he or either his parents or either his grandparents was born in Undivided India ( Undivided India covers – Even Citizens of Pakistan/ Bangladesh covered here as they or their parents were born in undivided India ).
In case of these people, only condition 1 to be satisfied .
( Condition 1 as per above statement – 1. He stays in India for 182 days or more during the previous year. )
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