Page 33 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes

Notes

(a) The term “stay in India” includes stay in the territorial waters of India (i.e. 12 nautical
miles into the sea from the Indian coastline). Even the stay in a ship or boat moored

in the territorial waters of India would be sufficient to make the individual resident
in India.
(b) It is not necessary that the period of stay must be continuous or active nor is it essential
that the stay should be at the usual place of residence, business or employment of the
individual.
(c) For the purpose of counting the number of days stayed in India, both the date of
departure as well as the date of arrival are considered to be in India.
(d) The residence of an individual for income-tax purpose has nothing to do with
citizenship, place of birth or domicile. An individual can, therefore, be resident in
more countries than one even though he can have only one domicile.

Exceptions

The following categories of individuals will be treated as residents only if the period of their stay
during the relevant previous year amounts to 182 days. In other words even if such persons were
in India for 365 days during the 4 preceding years and 60 days in the relevant previous year, they
will not be treated as resident.

1. Indian citizens, who leave India in any previous year as a member of the crew of an Indian
ship or for purposes of employment outside India, or
2. Indian citizen or person of Indian origin* engaged outside India in an employment or
a business or profession or in any other vocation, who comes on a visit to India in any
previous year

!
Caution A person is said to be of Indian origin if he or either of his parents or either of his
grandparents were born in undivided India.

Not-ordinarily Resident

Only individuals and HUF can be resident but not ordinarily resident in India. All other classes
of assesses can be either a resident or non-resident. A not-ordinarily resident person is one who

satisfies any one of the conditions specified under section 6(6).

(i) If such individual has been non-resident in India in any 9 out of the 10 previous years
preceding the relevant previous year, or
(ii) If such individual has during the 7 previous years preceding the relevant previous year
been in India for a period of 729 days or less.
Therefore in simpler terms, an individual is said to be a resident and ordinarily resident if he
satisfies both the following conditions:

(i) He is a resident in any 2 out of the last 10 years preceding the relevant previous year, and
(ii) His total stay in India in the last 7 years preceding the relevant previous year is 730 days or
more.

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