Residential Status and Scope of Total Income

Introduction
Residential status is an essential factor in determining the scope of an individual's total income for income tax purposes. The Income Tax Act of 1961 provides guidelines to determine the residential status of a taxpayer. It classifies individuals into three categories: resident, non-resident, and resident but not ordinarily resident.

Resident
An individual is considered a resident in India for a particular financial year if any of the following conditions are satisfied:
1. The individual stays in India for at least 182 days during the financial year.
2. The individual stays in India for at least 60 days during the financial year and has been in India for at least 365 days during the preceding four financial years.

Non-Resident
An individual is considered a non-resident if he/she does not meet any of the conditions mentioned above to be classified as a resident.

Resident but Not Ordinarily Resident (RNOR)
An individual can be classified as a resident but not ordinarily resident under the following circumstances:
1. The individual has been a non-resident in India for at least nine out of the ten preceding financial years.
2. The individual stays in India for at most 729 days during the preceding seven financial years.

Determination of Residential Status
The residential status of an individual is determined based on the number of days spent in India during a financial year. The following factors are considered to determine the residential status:

1. Physical Presence: The number of days an individual stays in India during a financial year is the primary factor in determining their residential status.
2. Exceptions: In certain cases, such as individuals leaving India for employment or as a member of a crew on a ship, specific exceptions are provided to determine the residential status.
3. Indian Citizens and Persons of Indian Origin: Indian citizens who leave India for employment or as a member of a crew on a ship are considered non-residents for a financial year unless they are in India for at least 182 days.
4. Indian Citizens Leaving India: Indian citizens or persons of Indian origin who leave India for employment or as a member of a crew on a ship are considered non-residents for a financial year if their stay in India is less than 182 days.
5. Deemed Residents: Individuals who are not Indian citizens but are of Indian origin and come to India for a visit are deemed to be residents if their stay exceeds 182 days.

Scope of Total Income
The scope of total income for an individual is determined based on their residential status. The income earned within India is taxable for residents and resident but not ordinarily residents. Non-residents are only taxed on income earned in India or income received or deemed to be received in India. However, if non-residents have business or professional income in India, their global income may be taxable under certain circumstances.

Conclusion
The determination of residential status plays a crucial role in determining the tax liability of individuals. The guidelines provided by the Income Tax Act help classify individuals into residents, non-residents, and residents but not ordinarily residents. The residential status further determines the scope of an individual's total income, with residents being subject to taxation on their global income, while non-residents are taxed only on income earned in India or received in India.