Residential Status Income Tax
The income tax liability of a taxpayer is based on residential status in previous financial year, and four years previous financial year. A person be a Indian citizen, but does not essential mean that they must be resident in India for a particular year. Section 6 of Income-tax Act 1961 contains provisions that relate to dedication Residency of a person.
What is a Resident in Income tax ?
A person is considered to be resident if he/ she or both stay in India for 182 days or more during the financial year,
A person is considered to be resident if he/ she or both stay in India for 365 days or more during 4 previous financial years. In extension, stay for a period of 60 days or more during the pertinent financial year.
What is a Non-Resident Income tax ?
Any taxpayer who is neither a resident nor ordinarily resident is a considered as a non resident.
Futher more Indian citizen and a person of Indian origin who visits India during the year for period of 60 days as mentioned above shall be replaced with 182 days. The related concession is provided to the Indian citizen who leave India in an earlier year as a crew members or for the purpose of business outside India.
Taxes for Resident and non Resident –
A resident will be taxed in India for his total incomes, which includes money earn in India as well as outside of India.
A non resident has limited tax load in India he has to pay taxes only on the income he /she made in India. He/She is not compelled to pay any tax in India on their international earnings. And other event of double taxation of income, when the similar income is taxed in India and foreign, one may broadcast on the Double Taxation prevention Agreement that India would have signed with the other nations to avoid paying taxes twice.
How to decide that a Individual is NRI?
Individual shall be considered to be an Indian resident only when he/she is not responsible to pay tax in any country or authority by reason of his accommodation or residence or any other basis of similar nature.
How Hindu undivided family (HUF ) residential status in India decides ?
A Hindu undivided family said to be a residential in India if handle and management of its affairs is completely or superficially situated in India.
A Hindu undivided family treated as non-resident in India if the operate and handling of their affairs are situated completely outside India. A firm or an union of persons can not be ordinarily or not ordinarily resident.
How Company residential status in India decides ?
A Indian company always be residential in India. A international company resident in India only if during the previous year, place of handling is situated completely in India. Inversely, a international company is handle as non-resident if during the previous year, place of capable management is either completely or partly situated out of India.
FAQ
- What is the basic conditions for determining residential status?
Ans.- The Residential conditions will be applying only if your total income (other than international sources) is more than Rs 15 lakh and nil tax liability in other countries and territories by reason of his domicile or residence or any other conventions of similar nature
2 .Why it is important to adjudicate residential status?
Ans- It is important for the Income Tax Department to adjudicate the residential status of a tax paying individual person or company. It becomes particularly important during the tax filing season. In this fact is based on which a person’s taxability is decided.
3. What is the major difference between residential status and citizenship? Ans- Citizens get all of the authority exemptions, freedom and responsibilities defined by that nation’s laws. These may be including rights to voting, participate in politics, right to practice religion and receive education, right to equality as call upon their country for legal assistance and protection.
4. What is the Categories of residential status?
Ans- A individual person’s residential status may be divided by three categories: Resident, Non-Resident, and Deemed Resident. The resident divided by ordinary resident and non-ordinary resident.
5. When a Person said resident in India?
Ans- An individual person is said to be a resident in the tax year if he/she is physically present in India for a provision period of 182 days or more in the tax year (regareding182-day rule)
6.When a Person said non-resident in India?
Ans- Non-Resident Individual person is an individual person who is not a resident of India for tax purposes.