Residential Status [Sections 5 to 9B] – Direct and Indirect Taxes with Tax Ready Reckoner

Table of Contents

1. Scope of Total Income / Incidence of Tax [Section 5]

Total income of an assessee cannot be computed unless we know his residential status in India during the previous year. According to the residential status, the assessee can either be:

(i) Resident in India; or

(ii) Non-resident in India.

However, individual and HUF cannot be simply called resident in India. If individual is a resident in India he will be either:

(a) Resident and Ordinarily resident in India; or

(b) Resident but not Ordinarily resident in India.

As per section 6(1A), an individual can be deemed to be Resident in India if certain conditions are satisfied. However, such individual shall be resident but not ordinarily resident in India.

Other categories of persons shall either be resident in India or non-resident in India. There is no further classification into ordinarily resident or not ordinarily resident in their case.

Scope of Total income according to residential status is us under:

1(A) In the case of Resident in India (Resident and Ordinarily Resident in case of Individual or HUF [Section 5(1)]

The following incomes from whatever source derived form part of Total Income in case of resident in India/ordinarily resident in India:

(a) any income which is received or is deemed to be received in India in the relevant previous year by or on behalf of such person;

(b) any income which accrues or arises or is deemed to accrue or arise to him during the relevant previous year;

(c) any income which accrues or arises to him outside India during the relevant previous
year

1(B). In the case of a Resident but Not Ordinarily Resident in India (In the case of Individuals and HUF only) (including an individual who is Deemed to be Resident in India) [Section 5(1) and its proviso]

The following incomes from whatever source derived form part of Total Income in the case of resident but not ordinarily resident in India (including an individual who is deemed to be resident in India):

(a) any income which is received or is deemed to be received in India in the relevant previous year by or on behalf of such person;

(b) any income which accrues or arises or is deemed to accrue or arise in India during the relevant previous year;

(c) any income which accrues or arises outside India during the relevant previous year if it is derived from a business controlled in or a profession set up in India.

1(C). In the case of Non-Resident [Section 5(2)]

The following incomes from whatever source derived from part of Total Income in the case of Non-Resident in India :

(a) any income which is received or is deemed to be received in India during the relevant previous year by or on behalf of such person;

(b) any income which accrues or arises or is deemed to accrue or arise to him in India during the relevant previous year.

Thus it may be noted that income described in items (a) and (b) in all the three cases above are to be included in total income of all the three categories of the assessees in the same manner. The income described in item (c) i.e. income which accrues or arises outside India is:

(i) not includible in the total income at all in case the assessee is non-resident in India.

(ii) includible in the total income in the case of resident but not ordinarily resident in India (including an individual who is deemed to be resident in India) only when it is derived from a business controlled in or profession set up in India.

Therefore, the incidence of tax is likely to be more in case of an assessee who is resident and ordinarily resident in India, a little less in case of a resident but not ordinarily resident in India and the least in case of non-resident in India if the assessee has various incomes both inside and outside India.

2. Need to determine Residential Status

As discussed above, the total income is different in case of a person resident in India and a person non-resident in India. Further, in case of an individual and HUF being “not ordinarily resident in India” (including an individual who is deemed to be resident in India), the meaning of total income

shall be slightly different. Since the total income of an assessee varies according to his residential status in India, the incidence of tax shall also vary according to such residential status in India.

3. Basic Rules for determining Residential Status of an Assessee

The following basic rules must be kept in mind while determining the residential status:

Residential status is determined for each category of persons separately g. there are separate set of rules for determining the residential status of an individual and separate rules for companies, etc.
Residential status is always determined for the previous year because we have to determine the total income of the previous year only.
Residential status of a person is to be determined for every previous year because it may change from year to year. For example, A, who is resident of India in the previous year 2021- 22, may become a non-resident in previous year 2022-23.
If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other source of income. [Section 6(5)]
A person may be a resident of more than one country for any previous year. If Y is a resident in India for previous year 2021-22, it does not mean that he cannot be a resident of any other country for that previous year.
Citizenship of a country and residential status of that country are separate concepts. A person may be an Indian national/citizen, but may not be a resident in India. On the other hand, a person may be a foreign national/citizen, hut may be a resident in India.
It is the duty of the assessee to pLace all material facts before the assessing officer to enable him to determine his correct residential status.

4. Rules for determining the Residential Status of an Individual [Section 6(1) & 6(1A)]

An individual may either be a:

(a) Resident in India; or

(b) Deemed to be Resident In India [Section 6(1 A)]; or

(c) Non-Resident in India.

An individual cannot simply be called a resident/deemed to be resident in India.

If he is a resident in India, we have to further determine whether he is:

(a) Resident And Ordinarily Resident in India; or

(b) Resident But Not Ordinarily Resident in India.

Further if an individual is deemed to be resident in India as per section 6(1 A), he shall be not ordinarily resident in India.

4(A). When an individual is said to be Resident In India?

An individual is said to be resident in India if he satisfies any one of the following two conditions:

Condition-1

He is in India for a period or periods amounting in all to 182 days or more in the relevant previous year [Sub-clause (a)];

Condition-2

He is in India for 60 days or more during the relevant previous year and has been in India for 365 days or more during 4 previous years immediately preceding the relevant previous year [Sub-clause (b)].

Explanation 1: As per the Explanation, there are two exceptions to the above rule:

(a) In case of an individual, who is a citizen of India and who leaves India in any previous year for the purposes of employment outside India, the condition No. 2 supra (mentioned above) shall not be applicable for the relevant previous year in which he leaves India. In other words, for that particular previous year in which he leaves India for the purposes of employment outside India he shall be called resident only when he satisfies the condition No. 1 mentioned above.

Similarly, in case of an individual who is a citizen of India and who leaves India in any previous year as a member of the crew of an Indian ship, the condition No. 2 supra shall not be applicable.

(b) In the case of an individual—

— being a citizen of India, or a person of Indian origin within the meaning of Explanation to section 115C(e), who, being outside India, comes on a visit to India in any previous year, the provisions of above sub-clause (b) shall apply in relation to that year as if for the words “60 days”, occurring therein, the words “182 days” had been substituted;

and

— in case of such person having total income, other than the income from foreign sources, exceeding Rs. 15,00,000 during the previous year, for the words ‘60 days” occurring therein, the words “120 days” had been substituted;

However, as per section 6(6) discussed below, in case of the citizen or person of Indian origin having total income, (other than the income from foreign sources), exceeding Rs. 15,00,000 during the previous year, if he comes to India for a visit for 120 days but less than 182 days in the previous year, he shall be deemed to be not ordinarily resident in India (See para 4(C) below).

Meaning of income from Foreign Sources [Explanation]

For the purpose of section 6, the expression ‘Income from foreign sources” means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India) and which is not deemed to accrue or arise in India.

In other words, a citizen of India or person of Indian origin, who had been in India for 365 days or more in the 4 preceding previous years and who undertakes a visit to India in any previous year, and

(a) whose total income other than income from foreign sources does not exceed Rs. 15,00,000 shall not be a resident in India if he stays in India upto 181 days in the relevant previous year; or

(b) whose total income other than income from foreign sources exceeds Rs.15,00,000 shall not be a resident in India ii he stays in India upto 119 days in the relevant previous year.

The moment he stays in India for 182 days or 120 days, as the case may he, he shall be treated as resident in India.

1. The above conditions, with exceptions / concessions may be called as category ‘A’ conditions.

2. A person is said to be of Indian origin if he, or either of his parents or any of his grandparents was born in undivided India i.e. before India was partitioned. [Explanation to section 115C(e)].

3. In case of an individual, being a citizen of India a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may prescribed. [Explanation 2]

Important Explanations

Relevant previous year means the previous year for which the residential status is being determined.
In computing the period of stay in India. it is not necessary that the stay should be for a continuous period. What is to be seen is the total number of day& stay in India during the relevant previous year.
It is also not necessary that the stay should be only at one place, e.g.. he may stay at Bombay for 90 days and then go out of India. On return in the same previous year, he may stay at Delhi for 120 days during the same previous year. His total stay in India will be 210 days for that previous year.
In computing the period of 182 days, the day the individual enters India and the day he leaves India should both he treated as stay in India.
Place and purpose of stay in India is immaterial. Presence in territorial waters of India would also be regarded as presence in India.

Meaning of Employment: The term “employment” is not defined in the Income-tax Act.

A man may employ himself so as to earn profits in many ways. Thus, he can set up an independent practice abroad or businessman can shill his business activities to a foreign country. A person merely undertaking tours abroad in connection with his employment in India would not be eligible for the relaxation provided under exception 1.

4(B). Citizen of India shall be Deemed to be Resident In India in certain cases [Section 6(1A)]

Notwithstanding anything contained in section 6(1), an individual shall be deemed to be resident in India in the previous year if he satisfies all the following conditions:

(i) he is a Citizen of India,

(ii) he has total income, other than the income from foreign sources, exceeding Rs. 15 lakh during the previous year,

(iii) he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

Explanation—For the removal of doubts, it is hereby declared that the above section 6(1A) shall not apply in case of an individual who is said to be resident in India in the previous year under section 6(1).

In other words, where an individual, is a citizen of India, having total income, other than the income from foreign sources, exceeding l5 lakh during the previous year and he is not liable to pay tax in a foreign country due to his

(a) domicile, or

(b) residence, or

conditions of section 6(1) with explanation mentioned above shall not he applicable and he shall be deemed to be resident in India in all eases i.e. although he does not stay in India for even one day.

However, an Explanation has been inserted under section 6(1A) to clarify that section 6(1A) shall not apply in case of an individual who is said to be resident in India in the previous year under section

6(1) read with Explanation 1 under the said section. Therefore, if an individual satisfies any of the two conditions read with Explanation mentioned in section 6(1) above, section 6(1A) shall not apply in his case.

Further, as per Section 6(6) discussed in para 4(C) below, citizen of India who is deemed to be resident in India under section 6(1A) shall be treated as not ordinarily resident in India.

1. Meaning or ‘income from Foreign Sources’ [Explanation]

For the purpose of soc [ion 6, the expression “income from foreign sources” means income which accrues or arises outside India (except income derived from a business controlled in or a profssion set up in India) and which is not deemed to accrue or arise in India.

2. Meaning of term ‘Liable to Tax’ [Section 2(29A)]

“liable to tax”, in relation to a person and with reference to a country, means that there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently been exempted from such liability under the law of that country.

Thus, if an individual is liable to tax under the law of a foreign country, section 6(1A) relating to deemed to be resident in India shall not be applicable. On the other hand. if he is not liable to tax in a foreign country, section 6(1A) relating to deemed to be resident in India shall become applicable provided the conditions mentioned in section 6(1A) are satisfied. However. in this case, he shall be nut ordinarily resident in India as per section 6(6).

4(C). When an individual is said to be Resident But Not Ordinarily Resident in India? [Section 6(6)]

Section 6(6) states that an individual shall be Not Ordinarily Resident in India if he satisfies any
one of the following conditions:

(1) he has been a non-resident in India in 9 out of 10 previous years immediately preceding the relevant previous year, or he has been in India for a period of 729 days or less in 7 previous years immediately preceding the relevant previous year.

(2) He is a citizen of India. or a person of Indian origin, having total income, other than the income from foreign sources, exceeding Rs. 15 lakhs during the previous year, as referred to in clause (b) of Explanation 1 to section 6(1) [See the amendment above], who has been in India for a period or periods amounting in all to 120 days or more but less than 182 days; or

(3) He is a citizen of India who is deemed to be resident in India under section 6(1A) [See amendment above]

4(D). When an individual is said to be Resident And Ordinarily Resident In India?

Deriving from the above para 4(C), an individual who is resident in India, shall he resident and ordinarily resident in India in the following cases:

He has been resident in India for at least 2 out of 10 previous years immediately preceding the relevant previous year.

This means that he must have satisfied any one of the conditions, with exceptions / concession (given above) for being a resident for at least 2 out of 10 previous years immediately preceding the relevant previous year, and

he has been in India for 730 days or more, during seven previous years immediately preceding the relevant previous year.

He is a citizen of India. or a person of Indian origin, having total income, other than the income from foreign sources, exceeding Rs.15 lakh during the previous year. and has been in India for a period or periods amounting in all to 120 days or more but less than 182 days;

Further, an individual who is deemed to be resident in India shall be not ordinarily resident in India as per section 6(6)(d).

Notes :

1. An individual who is deemed to be resident in India as per section 6(1 A) shall be not ordinarily resident in India as per section 6(6)(b).

2. A citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding Rs.15 Lakhs during the previous year, as referred to in clause (b) of Explanation 1 to Section 6(1) (See the amendment above), who has been in India for a period or periods amounting in all to 120 days or more hut less than 182 days shall be resident but not ordinarily resident in India as per section 6(6)(c).

4(E). When an individual is said to be Non-Resident In India [Section 2(30)]

An individual is said to be a non-resident, if he is not a resident in India i.e. none of the conditions (with exception/concession) mentioned in para 2.4a is satisfied.

The conditions for determining the residential status may be summarized as under:

(A) Conditions for determining whether an individual is Resident Or Not (Conditions of Category A)

1	2	3	4
For individuals not covered under columns 2, 3 and 4.	For an Indian citizen who leaves India during the relevant previous year for the purpose of employment or as a member of the crew of an Indian Ship.	For an Indian citizen or a person, of Indian origin who being outside India, comes to visit India during the relevant previous year and his total income other than the income from foreign source does not exceed Rs. 15 Lakhs.	For an Indian citizen or a person, of Indian origin who being outside India, comes to visit India during the relevant previous year and his total income other than the income from foreign source exceeds Rs. 15 Lakhs.
(a) Must be in India for at least 182 days during the relevant previous year. OR	Must be in India for at least 182 days during the relevant previous year.	Must be in India for at least 182 days during the relevant previous year.	Must be in India for at least 182 days during the relevant previous year.
(b) Must be in India for at least 60 days during the relevant previous year and 365 days during 4 previous years immediately preceding the relevant previous year.	The condition No. 2 of Col. No. 1 will be of no significance because in view of the exception, the period of stay in India has been raised to 182 days.	This condition No. 2 of Col. 1 will be of no significance because in view of the exception, the period of stay in India has been raised to 182 days.	Must be in India for 120 days or more and less than 182 days during the relevant previous year and 365 days during 4 previous years immediately preceding the relevant previous year.

(B) Conditions to be satisfied for being an Ordinarily Resident In India (Conditions of Category (B))

Should be resident in India for at least 2 out of 10 previous years preceding the relevant previous year.

AND

Should be in India for at least 730 days during 7 years preceding the relevant previous year.

If any or both of the above conditions of para B are not satisfied, he shall be said to be nor ordinary resident in India.

(C) Conditions to be satisfied for being Resident But Not Ordinarily Resident in India (Conditions of Category C)

(1) He has been a non-resident in India in 9 out of 10 previous years immediately preceding the relevant previous year or he has been in India for a period of 729 days or less in 7 previous years immediately preceding the relevant previous year; or

(2) He is a citizen of India, or a person of Indian origin, having total income. other than the income from foreign sources, exceeding Rs. 15 Lakh during the previous year, as referred to in clause (b) of Explanation 1 to Section 6(1) [See the amendment above], who has been in India for a period or periods amounting in all to 120 days or more but less than 182 days; or

(3) He is a citizen of India who is deemed to be resident in India under Section 6(1A) [See amendment above]

Illustration – 1:

Rickey Pouting, an Australian cricketer has been coming to India for 100 days every year since 2008-09:

(a) Determine his residential status for the assessment year 2022-23.

(b) Will your answer be different if he has been coming to India for 110 days instead of 100 days every year?

Solution :

(a) Rickey Ponting satisfies the second condition of category A because he is in India for more than 60 days during the relevant previous year and for 400 days during four years preceding the relevant previous year. Therefore, he is a resident.

Further, in this case, although he satisfies the first condition of category B of being resident for at least 2 out of 10 preceding previous years but he does not satisfy the second condition of category B as during 7 years preceding the previous year, he is in India for only 700 days. He shall, therefore, be a resident but not ordinarily resident in India.

(b) Yes. He will, in this case, be resident and ordinarily resident in India. He satisfies both conditions of category ‘B’ as he was in India for 770 days in the last seven years and he was resident for at least 2 previous years out of 10 previous years immediately preceding the relevant previous year.

Illustration – 2:

‘R’, an Indian citizen left India for the first time on 21.9.2021 for employment in Germany. During the previous year 2022-23 he comes to India on 5.5.2022 for 150 days. Determine (he residential status of ’R’ for assessment years 2022-23 and 2023-24.

Solution:

During the previous year 2021-22 ‘R’ was in India for 174 days (30 + 31+30+31+31+21) (i.e. 1.4.2021 to 21.9.2021) and therefore, does not satisfy the first condition. The second condition is not applicable in his case, as he is a citizen of India and leaves India in 2021-22 for employment abroad.

He is therefore, Non-Resident in India.

Similarly. during the previous year 2022-23, he visits India for 150 days. In this case also, second condition is not applicable as he is a citizen of India and has come to India for a visit. Therefore, he will be a Non-Resident in India even for previous year 2022-23.

Illustration -3 :

‘A’, a citizen of India left India on 6.6.2008 for employment abroad. He did not come to India upto previous year 2018-19. During 2019-20 and 2020-21, he visited India for 145 days and 195 days respectively. In the previous year 2021-22 he came to India on 7.4.2021 and left on 30.11.2021. Determine his residential status for assessment year 2022-23.

Solution:

Category ‘A’ conditions.

Previous year 2021-22: Stay in India is for 238 days (24 + 31 + 30 + 31 + 31 + 30 + 31 + 30) (i.e. 7.4.2021 to 30.11.2021). He is, therefore, Resident in India.

Category ‘B’ conditions

Previous Year	No. of Days’ Stay	Resident / Non-Resident
2020-21	195	Resident
2019-20	145	Non-Resident

As he is a citizen of India and visits India during the previous year’s 2020-21 and 2019-20, second condition will not be applicable in his case for the previous year 20 19-20. Prior to that he did not visit India after he left on 6.6.2008.

As he is resident only for one previous year, out of 10 preceding previous years (i.e. previous years 201 1-12 to 2020-21), he does not satisfy the first condition of category (B) i.e. being resident in at least 2 out of 10 previous years immediately preceding the relevant previous year.

There is no need to see the second condition of Category (B) as the first condition itself is not satisfied.

He, is therefore, “Not Ordinarily Resident in India”.

5. Residential Status of Hindu Undivided Family (HUF) [Section 6(2)]

5(A). When is HUF said to be a Resident In India?

An HUF is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

5(B). When is HUF said to be a Non-Resident?

An HUF is said to be non-resident in India if during the previous year, the control and management of its affairs is situated wholly outside India.

In other words, it will be non-resident in India if no part of the control and management of its affairs is situated in India.

Control and management refer to the decisions taken regarding affairs of the HUF. The control and management lie at the place where decisions regarding the affairs of the HUF are taken.

Once the HUF is a resident in India, it is to be further determined whether it is:

(a) Resident and Ordinarily Resident in India; or

5(C). When is HUF said to be a Resident And Ordinarily Resident In India’?

The HUF shall be said to be resident and ordinarily resident in India if the Karta of the HUF satisfies both the following conditions:

(a) He (Karta) must he resident in at least 2 out of 10 previous years immediately preceding the relevant previous year;

and

(b) He must he in India for at least 730 days during 7 previous years immediately preceding the relevant previous year.

5(D). When is HUF said to be Resident But Not Ordinarily Resident In India? [Section 6(6)(b)]

An HUF, which is resident in India, is said to be resident but not ordinarily resident in India during the relevant previous year, if the manager (Karta) of the HUF does not satisfy any one, or both, of the conditions mentioned in clauses (a) and (b) above.

For determining whether HUF is a Resident or Not, the residential status of its ‘Karla’ for the relevant previous year is of no relevance. But for determining whether HUF is ordinarily Resident in India or not, Karta’s status for the preceding years becomes relevant.

Excepting individual and HUF, all other persons are classified either as resident or mon-resident. They are not to be further classified as ordinarily resident or as not ordinarily resident.

6. Residential Status of Firm, Association of Persons (AOP), Body of Individuals (BOI) and of Other Persons (except Companies) [Section 6(2) and 6(4)]

These entities may either be Resident or Non-Resident in India for any previous year.

6(A). When is a Firm, AOP, BOI, etc. said to be Resident In India

A firm, AOP, etc. is said to be resident in India in any previous year in all cases except where during that year the control and management of its affairs is situated wholly outside India.

In the case of a firm, the control and management is in the hands of the partners and therefore, if the partners generally meet in India regarding the affairs of the firm, then the firm is said to be resident in India.

6(B). When is a Firm, AOP, BOI, etc. said to be Non-Resident in India

If the control and management of the affairs of these entities is wholly out of India during the relevant previous year then they are said to be non-resident.

In other words, to be Non-Resident, no part of the control and management should be in India.

For purpose of determining the residential status of a firm or an HLJF, the residential status of the partner of the firm or the members of the HUF. is immaterial except in cases where the residence of the partners or the members of the family affects its control and management.

7. Residential Status of a Company [Section 6(3)]

7(A). When is a Company said to be Resident In India

A company is said to be resident in India in any previous year, if—

(i) it is an Indian company; or

(ii) its place of effective management, in that year, is in India.

7(B). When is a Company said to be Non-Resident In India?

A Company will be a Non-Resident in any previous year if:

(a) it is not an Indian company

and

(b) its place of effective management, in that year. is not in India.

Meaning of “place of effective management”: “Place Of Effective Management” (POEM) means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.

8. Incomes Received or Deemed to be Received in India [Section 7]

(1) Received in India

Any income which is received in India, during the previous year by any assessee, is liable to tax in India, irrespective of the residential status of the assessee and the place of accrual of such income.

Receipts means the first receipt:

The receipt of income refers to the first occasion when the recipient gets the money under his own control. Once an amount is received as income, any remittance or transmission of the amount to another place does not result in receipt within the meaning of this clause at the other place.

This principle is of importance, firstly, in determining the year of receipt, and secondly, for ascertaining the incidence of taxation where it depends purely upon receipt of income. For instance, in the case of non-residents, their foreign income is not assessable, unless it is actually received in India. In their case, unless, at the time the money is received in India, it is received as income from an outside source, such receipt will not be an income receipt. If a non-resident had already received moneys outside India (in an earlier year or during the previous year) as income or exempt income and he was transferring the funds into India in the accounting year. such moneys will not count as income in the eyes of law.

(2) Income deemed to be received in India [Section 7]

The following incomes shall he deemed to be received in India in the previous year even in the absence of actual receipt:

(i) Contribution made by the employer to the recognized provident hind in excess of 12% of the salary of the employee;

(ii) Interest credited to the RPF of the employee which is in excess of 9.5% p.a.

(iii) Transfer balance from the Unrecognized fund to a Recognized Provident Fund

(iv) The contribution made, by the Central Government or any other employer in the previous year, to the account of an employee under a notified contributory pension scheme referred to in section 80CCD.

9. Tax Planning for Residential Status

As we know that non-resident in India is not liable to pay income-tax on incomes which accrue or arise and also received outside India, whereas a resident in India is liable to pay income-tax on such incomes. Therefore, every assessee would like to be a non-resident in India, if he has any income which accrues or arises outside India.

If any individual other than an individual who is deemed resident as per newly inserted section 6(1A) wishes to be a non-resident in India. he should be careful about the facts given below:

1. If an individual is a citizen of India and visits India in any previous year, he should not stay in India for more than 181 days (119 days, w.e.f. A.Y. 2021-22) in that previous year. Where he wishes to stay in India for more than 181 days (119 days, w.e.f. A.Y. 2021-22) at a stretch, he should plan his stay in such a manner that his stay in one previous year does not exceed 181 days (119 days, w.e.f. A.Y. 2021-22).

For example, he can stay from 2nd October of a particular previous year to 28th September of next previous year aggregating to 362 days at a stretch, still he will be called non-resident in India as the period of stay in each year will not exceed 181 days.

The above also hold good in case of a person of Indian Origin.

W.e.f. A.Y. 2021-22, the individual who is a citizen of India or person of Indian origin who can come to India and stay from 3rd January of a particular previous year to 28th July of next previous year aggregating to 238 days at a stretch, provided he was in India for not more than 364 days in the preceding 4 previous years.

Notes. —One should however, in the above case be careful regarding leap year as thy number of days for the month of February in that ca.sc shall he 29 instead of 28.

2. The citizen of India who wishes to leave India in any previous year for employment abroad. should leave India by 28th September so that his stay in India does not exceed 181 days and he may he called non-resident in India for that previous year.

3. A citizen of India, who does not leave India for employment abroad, should leave India by 29th May of the previous year if he had been in India for 365 days or more in the 4 preceding previous years.

4. Foreign national can stay in India for ll days in the previous year and he will still he nonresident in India provided his stay in India during the 4 preceding previous years immediately preceding the relevant previous year does not exceed 364 days. if it exceeds 364 days, then, in such a case, he cannot stay in India for more than 59 days in that previous year. However, he can stay at a stretch of 59 + 59 days if these fall in two previous years. Thus, such person can come to India in the first week of February and stay up to May 29th of the next year.

5. If an individual cannot become non-resident in India. he can still escape the liability of tax on all foreign incomes which accrue or arise and are received outside India except if such incomes accrue or arise from a business or profession set up or controlled from India provided he is not ordinarily resident in India.

6. The HUF will be non-resident in India only when entire control and management of its affairs is situated outside India. If it is not possible, HUF can claim the status of “not ordinarily resident in India” provided the Karta of HUF satisfies both or any of the two additional conditions.

7. There cannot be any planning of residential status in case of an Indian company because it is always a resident in India irrespective of its control and management. However, a non-Indian company can be non-resident in India if any part of the control and management of its affairs is situated outside India.

8. A non-resident in India can bring his income to India. which accrued or arose to him outside India in any previous year, after the previous year of accrual because in that case it will not be treated as received in India. It will be called as remitted to India.

The same holds good in case of “not ordinarily resident in India” provided such income is not from the business or profession which is set up or controlled from India.