Residential Status for Income Tax Purposes
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INTRODUCTION
Tax is levied on total income of assessee. Under the
provisions of Income-tax Act, 1961 the total income of
each person is based upon his residential status.
Section 6 of the Act divides the assessable persons into
three categories : (i) Ordinary Resident; (ii) Resident
but Not Ordinarily Resident; and (iii) Non-Resident.
MEANING OF
RESIDENTIAL
STATUS
Residential status is a term coined under Income Tax
Act and has nothing to do with nationality or domicile of
a person. An Indian, who is a citizen of India can be
non-resident for Income-tax purposes, whereas an
American who is a citizen of America can be resident of
India for Income-tax purposes. Residential status of a
person depends upon the territorial connections of the
person with this country, i.e., for how many days he has
physically stayed in India.
IMPORTANT
POINTS TO BE
NOTED
Residential Status in a previous year.
Duty of Assessee.
Dual Residential Status is possible.
Same Residential Status for all sources of income.
At a glance
ORDINARY RESIDENT
ORDINARY RESIDENT =
satisfying any one of
conditions given u/s 6(1) + satisfying both the
additional conditions of sec 6(6)(a)&(b)
NON-ORDINARY RESIDENT
NON-ORDINARY RESIDENT =
satisfying any one of
conditions given u/s 6(1) + not satisfying any one or
both the additional conditions of sec 6(6)(a)&(b)
Basis of
determination of
residential status
Tax is levied on the total income of an individual based on their residential status as per the Income-tax Act, 1961. The Act classifies assessable persons into Ordinary Resident, Resident but not Ordinarily Resident, and Non-Resident. Residential status is determined by the physical presence of an individual in a country and is not related to nationality. Different criteria apply to Ordinary Resident and Non-Ordinary Resident status, impacting tax liabilities. It is essential to understand these distinctions for accurate tax assessments.
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Presentation Transcript
BASIS OF CHARGE BASIS OF CHARGE OR OR RESIDENTIAL STATUS RESIDENTIAL STATUS
Tax is levied on total income of assessee. Under the provisions of Income-tax Act, 1961 the total income of each person is based upon his residential status. Section 6 of the Act divides the assessable persons into three categories : (i) Ordinary Resident; (ii) Resident but Not Ordinarily Resident; and (iii) Non-Resident. INTRODUCTION
Residential status is a term coined under Income Tax Act and has nothing to do with nationality or domicile of a person. An Indian, who is a citizen of India can be non-resident for Income-tax purposes, whereas an American who is a citizen of America can be resident of India for Income-tax purposes. Residential status of a person depends upon the territorial connections of the person with this country, i.e., for how many days he has physically stayed in India. MEANING OF RESIDENTIAL STATUS
Residential Status in a previous year. IMPORTANT POINTS TO BE NOTED Duty of Assessee. Dual Residential Status is possible. Same Residential Status for all sources of income.
ORDINARY RESIDENT ORDINARY RESIDENT = satisfying any one of conditions given u/s 6(1) + satisfying both the additional conditions of sec 6(6)(a)&(b) At a glance NON-ORDINARY RESIDENT NON-ORDINARY RESIDENT = conditions given u/s 6(1) + not satisfying any one or both the additional conditions of sec 6(6)(a)&(b) satisfying any one of
PERSON BASIS FOR RESIDENTIAL STATUS INDIVIDUAL Stay in India HUF Control and management of affairs + stay of karta in India Control and management of affairs FIRM Basis of COMPANY Place of effective management + place of Incorporation Control and management of affairs determination of residential status AOP/BOI LOCAL AUTHORITY Control and management of affairs OTHER PERSONS Control and management of affairs
