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BY:TRISHTA JAISWAL
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R E S I D E N T I A L S TAT U S A N D I N C I D E N C E O F TA X
BASIS OF CHARGE
Residential status
Under the provisions of INCOME TAX 1961, the total income of a each person is based upon his residential status.
section 6 divides assessable person into two categories
i. Resident in Indiaii. Non- resident in IndiaHowever in case of INDIVIDUAL OR HUF :I. Resident & Ordinary ResidentII. Resident but ‘not ordinary resident’
RESIDENTS
RESIDENTS NON RESIDENT
ORDINARY RESIDENT
NOT ORDINARY RESIDENT
• Basic rules
• Residential status is determined for each previous year.• Dual residential status is possible.• Duty.
“PERSONS”
• SEC.2(31) DEFINED PERSONTHAT INCLUDES• An Individual• H.U.F• Firm• Company• AOP/BOI• Local Authority• Other artificial juridical person
Rules for determining residential status of an individual U/S 6(1)
Basic conditions:
a)He is in India for a period of 182 days or more.
ORb)60 days or more +365 days or more during 4 years immediately preceding the relevant P.Y
•Additional conditions:I)he has been resident in India at least for 2years out of 10 previous years immediately preceding the relevant previous year
&ii)He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant P.Y
AT A GLANCE:-
conditions resident Non resident
Ordinary resident
Not ordinary resident
BASIC CONDITION(A) OR (B)
ANY 1 ANY 1 NONE
ADDITIONAL CONDITION(I) & (II)
BOTH NONE IRRELEVANT
Exceptions
• TWO EXCEPTIONS:• X-1 individual who is citizen and who leaves India in any P.Y for the purpose of employment outside India. The period is relaxed to 182 days• X-2 individual who is citizen of India or foreign nation of Indian origin who being outside India in any P.Y the period is relaxed 182 days.
Important points
1.Meaning of stay in India2.Stay may be continuous or
intermittent3.Stay need not to be at one
place4.Object of stay not important5.Calculations of no. Of days
EXAMPLES…..
• Mr. X an Indian citizen.• Leaves India for 1st time on 31st may 2008• Comes back on 15th may 2011• Again leaves India on 10th June 2012.• Comes back on 14th Jan 2013• Living in India since then.• Determine his residential status.
SOLN.
• STAY IN P.Y 12-13:• 1ST AP.2012 -10 JUNE 2012 =30 +31+10• =71 DAYS• 14TH JAN 2013- 31 MAR 2013 =18+28+31• =77 DAYS• TOTAL STAY IN P.Y= 71+77• =148 DAYS
• BASIC CONDITION:• (A) 182 DAYS : NOT FULFILLED• (B) 60 DAYS : FULFILLED• STAY IN 4 IMMEDIATELY PRECEEDIND P.Y• 2011-2012 = 322 DAYS• 2010-2011= NIL• 2009-2010 =NIL• 2008-2009 = 61 DAYS• 383 DAYS
• THUS RESIDENT• ADDITIONAL CODITIONS:• BOTH FULFILLED• THUS MR.X IS ORDINARY RESIDENT
RESIDENTIAL STATUS OF HUF: U/S 6(2)
conditions resident Non resident
Ordinary resident
Not ordinary resident
Control and mgmt. wholly/partially situated in India in P.Y
fulfills fulfills NOT
ADDITIONAL CONDITION(I) & (II)
BOTH NONE IRRELEVANT
Examples
• A H.U.F carrying on business in India. head office in KNP. From whre it is controlled.• Karta was out to kenya for business purpose in
2011 and 2012•
SOLN.
Basic condition fulfilled so RESIDENTAdditional: fulfilled so ORDINARY RESIDENT
RESIDENTIAL STATUS OF COMPANY: U/S 6(3)
CONDITION RESIDENT CO. NON RESIDENT CO.
AN INDIAN CO.ORCONTROL OF MGMT. OF AFFAIRS IS WHOLLY IN INDIA
SATISFIES
SSATISFIES
NOT SATISFIED
NOT SATISFIED
RESIDENTIAL STATUS OF FIRM: U/S 6(4)
CONDITION RESIDENT NON RESIDENT
If control and mgmt of affairs is wholly/partially situated in India during relevant P.Y
SATISFIES NOT SATISFIED
EXAMPLE
• JKL Co. is a partnership firm registered in India. Mr. J its senior partner, was in U.K for more than 340 days during the year ended on 31st march 2013 for business purpose.• Soln: RESIDENT
THANK YOU