Residential Status and Scope of Total Income
What this domain tests
Residential status decides whether foreign income enters the computation, so examiners pair it with a computation of total income or a short theory question on deemed residence.
Core rules
- Basic condition u/s 6(1): stay in India for 182 days or more in the previous year, or 60 days or more in the previous year plus 365 days in the four preceding years.
- The 60-day limb is replaced by 182 days for an Indian citizen leaving India for employment or as crew, and for a citizen or PIO visiting India with total income (other than foreign-source) above Rs.15,00,000, who uses 120 days and must not be liable to tax in another country.
- Deemed resident u/s 6(1A): an Indian citizen with Indian income above Rs.15,00,000 who is not liable to tax in any other country.
- Resident and ordinarily resident: resident in 2 of the 10 preceding years and stay of 729 days or more in the 7 preceding years. Otherwise resident but not ordinarily resident.
- Scope: ROR is taxed on global income; RNOR on Indian-source income plus foreign income from a business controlled in India or a profession set up in India; non-resident on Indian-source income only.
Worked example
An Indian citizen takes up a job in Dubai and stays in India for 150 days in the previous year. Because he left for employment, only the 182-day test applies; being below 182 days, he is a non-resident, and his Dubai salary for services rendered there is outside the scope.
Traps
- Applying the 60-day test to a person who left India for employment.
- Treating a deemed resident as automatically ordinarily resident; deemed residents are always RNOR.
- Forgetting that salary for services rendered in India is deemed to accrue in India u/s 9(1)(ii), even if paid abroad.