Page 37 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Therefore you can say that for all purposes of income-tax, taxpayers are classified into three
broad categories on the basis of their residential status as stated below and as reflected in
Figure 2.1:
(1) Resident and ordinarily resident
(2) Resident but not ordinarily resident
(3) Non-resident

Figure 2.1: Residential Status of Individual

Source: http://www.mu.ac.in/myweb_test/TYBCOM%20study%20material/T.Y.B.Com.Paper%20-
%20V%20-%20Sec.I%20-%20Direct%20Taxes.pdf
The residential status of an assessee must be ascertained with reference to each previous year.
A person who is resident and ordinarily resident in one year may become non-resident or
resident but not ordinarily resident in another year or vice versa. The provisions for determining
the residential status of assessee are:
1. Residential status of individuals: Under section 6(1), an individual is said to be resident in
India in any previous year, if he satisfies any one of the following conditions:
(i) He has been in India during the previous year for a total period of 182 days or more,
or

(ii) He has been in India during the 4 years immediately preceding the previous year
for a total period of 365 days or more and has been in India for at least 60 days in the
previous year.
If the individual satisfies any one of the conditions mentioned above, he is a resident. If
both the above conditions are not satisfied, the individual is a non-resident also referred
to as NRI.

Example: X left India for the first time on May 20, 2003. During the financial year
2005–06, he came to India once on May 27 for a period of 53 days. Determine his residential status
for the assessment year 2006–07. Since X comes to India only for 53 days in the previous year
2005–06, he does not satisfy any of the basic conditions laid down in section 6(1). He is, therefore,
non-resident in India for the assessment year 2006–07.

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