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RESIDENTIAL STATUS [SEC. 6] The test of Basic conditions and additional determine the residential status of anIndividual.

BASIC CONDITIONS [U/S 6(1)](a) One should be in India during the relevant previous year for a period of 182 days

or more.(b) One should be in India for a period of 60 days or more during the relevant

previous yearAND 365 days or more during 4 years immediately preceding the

relevant previous year.

Note: The word AND in basic condition (b) Signifies that assessee has to satisfy bothparts i.e. 60 days or more during the relevant previous year and 365 days or more during

4 years immediately preceding the relevant previous year.

ADDITIONAL CONITIONS [U/S 6(6)](i) A person should be a resident in India for atleast 2 years out of 10 years

immediately preceding the relevant previous year.

Note: A person is said to be a resident in India if he satisfies atleast any one of the abovementioned basic conditions U/S 6(1)

(ii) He should have stayed in India for a period of 730 days or more during 7years immediately preceding the relevant previous year.

Different Residential Status

(i) Resident: An individual is said to be a resident in India if he satisfies atleastany one of the above mentioned two basic conditions U/S 6(1)

(a) Ordinary Resident: A Resident is said to be an ordinary Resident if he

satisfies both the additional conditions given above U/S 6(6)

(b) Not Ordinary Resident: A Resident is said to be a Not Ordinary Resident if hesatisfies one or none of the additional conditions given above U/S 6(6)

(ii) Non- Resident: An Individual is said to be a non-resident if he satisfies none

of the basic conditions and additional conditions being irrelevant.

EXCEPTIONS TO THE RULE OF RESIDENTIAL STATUS: The period of 60 days mentioned in basic condition (b) U/S 6(1) shall beextended to 182 days in the following situations:

(i) An Indian citizen who leaves India during the previous yearfor thepurpose of employment outside India.

(ii) An Indian citizen who leaves India during the previous year as a member

of crew of Indian ship.

(iii) An Indian citizen or a person of Indian origin who comes to India on a

visit during the previous year.

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Provident fund (PF) Provident Fund is a form of salary which is for the benefit of assessee afterretirement. The mechanism of PF works like this (4 incidences of PF)1. Every month the employee will be contributing to this fund for his future

benefits.

2. Normally the same amount will be contributed by the employer also to thefund

3. Interest will be earned by investing these funds in some good rated securities.

4. Assessee can withdraw this at the time of leaving the job or retirement ordeath.

To promote savings from employees deduction U/S 80C is provided by theGovernment.

Type of PF

1. Statutory PF: Maintained by Government

2. Recognized PF: Recognized by commissioner of Income tax

3. Unrecognized PF: Not recognized by commissioner of IT nor recognized by

government.4. Public Provident Fund: This is available for general public

Now let us learn tax treatment for all the four incidence of PF and four types

of PF.

Particulars Statutory Recognized PF Unrecognized

PF

Public PF

Employees

contributionEmployers

contribution

Interest on

accumulated

balance

Withdrawal

(Lumpsum)

Deduction U/S

80CNot taxable

Not taxable

Not taxable

(Exempt)

Deduction U/S

80 CUpto 12% of

salary not

taxable. In

excess of 12%of salary

taxable.

Upto 9.5%

Interest- not

taxable Above

9.5%- Taxable

More than 5 yrs

of continues

service exemptless than 5 yrs

of service treat as URPF

No deduction

Not an Income

Not an Income

Employees

contribution

exempted

Interest on

employeescontribution Income from

Sources

Employerscontribution +

Interest on this

profits in lieu

Deduction U/S

80CExempt

Exempt

Exempt

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of salary

Salary:

Basic Salary

(+) Dearness pay (if enters)(+) DA (enters)

(+) Commission based on fixed % on turnover achieved by assessee.The amount eligible for deduction U/S 80 C is subjected to the maximum limit of1,00,000.