TAX RESIDENCY IN INDIA - FROM THE EYES OF AN INDIVIDUAL

The Income Tax Act leaves the choice to the citizen to be in India and be treated as a resident for purposes of taxation or be not in India so as to avail the status of a non-resident. The simple test the muster of which is to be passed is the minimum prescribed period of presence in India in a particular financial year.- Adv Sherry Samuel Oommen

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It's that time of the year when returns have to be filed. It is also that time of the year when one would expect the portal of the Department to crash and drama arising consequent to the same being a hyped topic. I would hope that this year would be a different year.

Moving on, I have been receiving queries primarily from my friends in the NRI community regarding their tax residency in India, deemed tax residency, et al and the basis of determining the same. As a precursor, it must be noted that tax residency in India is determined based on the number of days spent by an individual in India. The related test of residency is enumerated in Section 6 of the Income-tax Act, 1961 (“the Act”).

1. Test of residency under the Act

In accordance with the provisions of section 6 of the Act, an individual is said to be a resident if he satisfies any of the below-mentioned tests:

a. The individual is present in India for a period of at least 182 days during the concerned financial year; OR

b. The individual is present in India for a period of at least 60 days in the concerned year and at least 365 days in the aggregate in the immediately four preceding years.

It deserves mention that the period of 60 days in condition (b) would stand increased to 182/ 120 days in the following cases:

i.