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3/24/2014
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The determination of Residential Status of a person is very important for the purpose of levy of income tax, as
income tax is levied based on the residential status of a taxpayer. The Residential Status of a taxpayer can be
divided in the following categories
Determination of Residential Status of a taxpayer is very important at the time of filing of income tax return as
income tax is levied based on the Residential status of the taxpayer. The following types of incomes are taxable
in the hands of the different categories of taxpayers:Particulars
Resident and
Not ordinary Non-Resident
Ordinary Resident Resident
Income received or deemed to be received in
India whether earned in India or elsewhere
Income which accrue or arise or is deemed to
accrue or arise in India during the previous
year, whether received in India or elsewhere
Income which accrue or arise outside India
and received outside India from a business
controlled from India
Income which accrue or arise outside India
and received outside India in the previous year
from any other source
Income which accrues or arises outside India
and received outside India during the year
preceding the year and remitted to India
during the previous year
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
No
No
Yes
No
No
From the above table, it is clearly visible that the maximum income tax is levied in case of an Ordinary
Resident, lesser in case of Not-Ordinary Resident and the least in the case of a Non Resident Indian (NRI).
Recommended Read: How to save tax legally through tax planning in 8 different ways
After determining the residential status, the all incomes of an individual (except Capital Gains) would be taxable
as per the Income Tax Slabs for that financial year.
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3/24/2014
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http://www.charteredclub.com/residential-status/
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Rs. 80,000 in USA but then remits it to India. This income would not be taxable in his hands in India because it
is neither earned in India nor received (1st receipt) in India.
Citizenship of a Country and Residential Status
Citizenship of a country and residential status 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 but may be a
resident in India.
Computation of Period of Stay
In computing the period of stay for the purpose of residential status, it is not necessary that the stay should be for
a continuous period. What is to be seen is the total number of days of stay in India during that financial year. It
is also not necessary that the stay should be only at 1 place and can be anywhere in India.
For the purpose of computing the period of 182 days for the determination of residential status, the day he enters
India and the day he leaves India should both be treated as stay in India. However, in borderline cases where
stay in India is very close to 182 days, his stay in India has to be calculated on hourly basis and a total of 24
hours will be taken as 1 day.
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Previous post: Belated Return: Filing of Income Tax Return after Due Date
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