How to check residential and non-residential ?


residential status meaning in English – Your residential status is calculated on the basis of how long you have lived in a country.

To levy tax on any person, first of all the residential status of that person is seen. No person can be taxed without seeing the residential status.

Residential status means whether a person is a resident of India or not. If he is a resident in India, then the tax calculation on his income will be done differently and the tax will be calculated differently for that person being a non-resident.

Apart from this, if you also file your Income Tax Return, then first you have to tell your residential status .

Whether any income is taxable for you or not also depends on your residential status.

In today's article (residential status meaning in English), we will know how the residential status of an individual is seen and which income will be taxable for him.

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Types of Residential status –

In the Income Tax Act 1961, for the purpose of levying tax, an individual is divided into different types, such as –
  • Resident in India and
  • Non-Resident in India (NON-Resident)
If an Individual is a resident of India, then it is further divided into 2 parts –
  • Ordinary Resident (Ordinary Resident in India)
  • Not Ordinary Resident
Now if we look at a person for the purpose of income tax, then 3 types of types come in front of us –
  • Resident But Ordinary Resident
  • Resident But Not Ordinary Resident
  • NON- Resident
To fall into any of these types, an individual has to fulfill different conditions, which we will see separately later.

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Ordinary Resident and Not Ordinary Resident

In the calculation of residential status, first of all we see whether that person is Resident or NON-Resident.

  • To become a resident of India, a person has to fulfill any one of these basic conditions –That person should have been in India for 182 or more days in the previous year.
Or
  • The person should have been in India for 60 or more days in the previous year and in India for 365 or more days in the 4 years preceding the previous year.
If any one of these two basic conditions is fulfilled, then for the purpose of income tax, that person will be considered as resident in India.

Now if a person is a resident of India, then in order to find out whether he is a normal resident or not a normal resident in India, we will see the following 2 additional conditions -
  • That person has been in India for at least 2 years in the 10 years preceding the previous year,
And
  • He should have been in India for 730 days or more in the 7 years preceding the previous year.
Now if someone else in with one or two basic condition both fulfilling the Additional condition, that person will be treated as ordinarily resident in India.
But a person who is fulfilling any one basic condition, but is not fulfilling any one additional condition or any additional condition, then that person will not be considered as a normal resident of India.

NON – Resident (Non-Resident) –

If a person is not fulfilling even one basic condition, then that person will be considered as non-resident in India.

In Budget 2020 , some changes have been proposed in the conditions of becoming a resident in India, according to which if a person is a citizen of India and he is not a resident in any other country, then that person will be considered resident in India.

By doing this, many Indian citizens who live outside India and come to India for less than 182 days, due to which they are not able to fulfill the conditions of becoming resident in India and also do not reside outside India. There will be a big blow.

Because by considering them as resident in India, they will have to pay tax in India on all their income, whether it is earned in India or not.

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Some persons for whom the rule is different to become resident in India (exception) –

There are also some persons to whom the second basic condition does not apply to become resident in India, that is, such a person will be considered resident in India only if he has lived in India for 182 days or more in the previous year.

Such a person is –
  • any person who is a citizen of India but leaves India for employment outside India, or
  • A person who is a citizen of India or a person of Indian origin and comes to India for a visit.

In both these cases, the individual will not be given the option of the second basic condition to become a resident in India.

But, in the Budget 2020, it has been recommended to implement the limit of 120 days instead of 182 days in the calculation of residential status for such persons who are citizens of India or of Indian origin and come to India for travel.

Also know whether agricultural income is completely tax free and otherwise how it is taxed.

taxation of income – residential status meaning in English

Whether an income is taxable or not for an individual depends on his residential status. In the table given below we will see which income is taxable to an individual and which is tax free.

ParticularResident but ordinary residentResident but not ordinary residentNon- resident
Income deemed to be received or received in IndiaTaxableTaxable Taxable
Income deemed to be earned or earned in IndiaTaxableTaxableTaxable
Earned or deemed to have earned outside India but the first receipts of such income were made in IndiaTaxableTaxableTaxable
Any income earned or deemed to be earned outside India but the business and/or profession is in or controlled by IndiaTaxableTaxableNot Taxable
Income earned outside India and received outside IndiaTaxableNot TaxableNot Taxable

In the above table you can see that a person who is an ordinary resident of India and he is earning income anywhere in India or outside India, then he will have to pay tax on that income. Also know why notices come from Income Tax Department?

How to calculate the period of stay of a person in India to become resident in India?

In the calculation of the period of stay of a person in India, the total number of days spent by him in India is added. Therefore it is not necessary that the person has been in India continuously, if he comes to India at different times in a year then all those days will be added.

Apart from this, it is also not necessary that that person should stay at any one place in India. He can stay at any place in India.

In the calculation of days of stay in India, the days of arrival and departure of that person in India will also be added.

other points – (residential status meaning in English)

  • Citizen of India and resident of India are both different concepts, a person can be a citizen of India but it is not necessary that he should also be a resident of India. Similarly a foreign person is not a citizen of India but can be a resident of India if he fulfills the conditions of being resident in India.
  • Residential status is seen for each year. So it is not necessary that if a person is a resident in any year, he will remain resident in the next year also.
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