|
My first article on
section 6(1) of Income
tax act - dated 26-01-2021 |
·
Meaning and Importance of residential Status
·
How to determine residential status under Indian
Income Tax act
o
Resident
o
Resident Not Ordinarily Resident
o
Non- Resident
·
Taxability
Introduction
Residential Status under Income Tax Act
The term residential status has
been coined under income tax act. The taxability of an individual in India depend
upon his residential status in India for by particulars preceding year
Resident Not Ordinarily Resident
If an individual qualifies as a
resident the next step to determine to find out whether he will be a R-OR or
R-NOR
If he meets both of the following
conditions
1) He
has been resident of India in at least 2 out of 10 years immediately previous
year
AND
2) He
stayed in India for at least 730 days in 7 immediately preceding year
Therefore, if any individual fail
to satisfy once one of the above conditions, he would be an R-NOR
A taxpayer would qualify as a
resident of India if he satisfies on of the following 2 conditions
1) Stay
in India for a year 182 days or more
Or
2) Stay
in India for immediately 4 preceding years is 365 or more AND 60 days or more in the relevant financial
year
Taxability
Resident: - A resident will be
charged to tax in India on his global income i.e income earned in India as
well as income earn outside India
NR & RNOR: - Their tax
liability in India restricted to the income they earn in India
they need not pay any tax in India on
their foreign income.
