Residential Status and Scope of Total Income
What the exam tests
This domain tests the status of individuals, HUFs, firms and companies, and how that status determines whether Indian-source and foreign-source income enters total income. The key provisions are Sections 6 and 7 for status and Section 5 for scope.
Core rules
- Individual basic conditions: Resident if stay in India is at least 182 days in the previous year, or at least 60 days in the previous year plus 365 days in the four preceding previous years.
- Exceptions: An Indian citizen leaving India for employment outside India, or as a crew member, generally uses only the 182-day test. An Indian citizen or person of Indian origin visiting India uses 182 days, or 120 days where total income other than foreign-source income exceeds ₹15 lakh, coupled with 365 days in the four preceding years.
- Resident and ordinarily resident: Resident plus resident in at least 2 of the 10 preceding years and stay of at least 730 days in the 7 preceding years.
- RNOR: Resident but not ordinarily resident. A deemed resident under the Indian-income route is RNOR.
- Company: An Indian company is always resident. A foreign company is resident if its place of effective management is in India.
Scope
ROR: global income. RNOR: Indian-source income plus foreign income from a business controlled in India or a profession set up in India. Non-resident: Indian-source income, plus certain deemed incomes.
Worked example
Mr X stays in India for 190 days in the previous year. He satisfies the 182-day basic condition and is resident. He was non-resident in 9 of the 10 preceding years and stayed only 600 days in the 7 preceding years. He is therefore RNOR, not ROR, and foreign income from a business controlled outside India is not taxable.
Traps
Stay of 182 days is not required for every case; the 60-plus-365 route has exceptions. A deemed resident is not automatically ROR. POEM is a company test, not an individual stay test.