Condition applicable to an Individual assessee - Income Tax Laws Video Lecture - B Com

Hi there ! This is Student Guide Live & we
will be discussing the conditions of residential
status applicable to Individual.
We have already discussed that an Individual
can be ROR, RNOR or NR. An Individual can
never be just a Resident. The conditions which
determine whether the individual assesse will
be ROR, RNOR or NR are prescribed by Sec 6(1)
& Sec 6(6)(a). The conditions of Sec 6(1)
determine whether the individual assesse will
be Resident or Non Resident and the Conditions
of Sec 6(6)(a) determine whether the resident
individual assesse will be Ordinarily Resident
or Not Ordinarily Resident. It means conditions
of Sec 6(6)(a) are applicable to only those
individual assesses who have fulfilled the
conditions of Sec 6(1).
There are three conditions in Sec 6(1). These
can be divided in two sets. For our convenience,
I will call them as Set 1 and Set 2. Set 1
contains only one condition and set 2 contains
two conditions. To become resident an individual
assessee must fulfill either the first set
or the second set. In other words, an individual
assessee must fulfill either first condition
only or the second and third conditions both.
Before I start discussing the conditions,
I want you to remember three things,
Remember that these conditions are equally
applicable to every individual irrespective
of gender or age. For the convenience of our
discussion, I will speak as if the assessee
is a male individual.
Note that the residential status is not permanent,
but it is an annual phenomenon. The assessee
must check his residential status every year.
The year in question is called as relevant
previous year. For our convenience I will
call it as RPY.
And lastly, the conditions of residential
status of an individual assessee does not
depend upon his nationality, citizenship,
race, religion, educational qualification
or place of birth. It depends on stay in India.
Longer the stay, higher the chances that the
individual is resident in India.
Let us now understand the conditions. Set
1 says, If the individual stays in India for
a period of at least 182 days during the RPY,
then he will be treated as resident in India.
It means, if the stay in India during the
RPY is equal to or greater that 182 days then,
he will be treated as Resident in India. If
this condition is not fulfilled, i.e. if the
stay in India during the RPY is less than
182 days, then the 2nd set of conditions come
in to picture. Remember, second set comes
in to picture only if the assessee does not
fulfill the condition of at least 182 days
given by Set 1.
The second set contains two conditions. To
be classified as resident, the assessee must
fulfill both these conditions. The conditions
are,
If he stays in India for a period of at least
60 days during the RPY and
If he stays in India for a period of at least
365 days in 4 previous years immediately preceding
the RPY.
It means, the second set asks you to consider
the stay of the individual in the RPY as well
as in 4 previous years immediately preceding
the RPY. During RPY his stay must be either
equal to or greater than 60 days & the total
of his stay in 4 previous years immediately
preceding RPY should be equal to or greater
than 365 days
If the assessee fulfills the condition of
182 days as given by Set 1, then he is already
resident. There is no need to check the conditions
of second set. If the assessee fails to fulfill
the condition of 182 days then we will check
the conditions of 60 days and 365 days as
given by Set 2. Remember, in Set 2, fulfilling
both the the conditions is necessary to be
classified as resident. Failing to fulfill
any one of them will make him a non resident.
i.e. if he fulfills 60 days in RPY but does
not fulfill 365 days in 4 years then he is
non resident. Similarly, if he fulfills 365
days in 4 years but does not fulfill 60 days
in RPY then also he is non resident.
If the assessee is non resident, then there
is no need to check the conditions of sec
6(6)(a). But if he is resident, then it is
necessary to check the conditions of sec 6(6)(a).
It more like your result. If a student has
not cleared the exam then the result is failed;
on the other hand if the student has cleared
the exam then the result will not be just
passed, but he would love to tell passed with
first class or passed with second class etc.
Similarly, if an individual is resident in
India, then sec 6(6)(a) will determine his
class of ordinary residence.
There are only two conditions in sec 6(6)(a)
and they are not divided in any sets. It means
to be treated as ordinary resident in India,
the Individual must fulfill both the conditions
of this section. Non fulfillment of any one
of them will make him not ordinarily resident
in India.
The first condition says if he stays in India
for at leat 730 days in 7 previous years immediately
preceding the RPY & the second condition asks
you to check whether he was resident in India
in any 2 out of 10 previous years immediately
preceding the RPY. As discussed earlier, if
the answer to both these questions is yes
then the individual who was already a resident
will be treated as resident and ordinarily
resident i.e. ROR. On the other hand if the
answer to any one of these questions is no
then the individual who was already a resident
will be treated as resident but not ordinarily
resident i.e. RNOR.
Before we conclude, I would like you to note
that
Stay can be anywhere in India. 
Stay includes travel in India. 
Stay in a ship moored in the territorial waters
of India is also treated as stay in India. Territorial
Waters the area of 20 nautical miles from
the land mass of India.
Stay can be for small intervals at different
places in India. 
Stay need not be at a stretch. In fact Income
tax uses the word days in section 6(1) and
section 6(6)(a). It means, If an individual
goes out of India & comes back several times
during the year, then his stay for the RPY
= Total stay in each such visits during the
RPY. 
In case of day of arrival or day of departure,
if the time of arrival or time of departure
is known then; the collection of 24 hours
is counted as one day. 
& for exam purpose, if the time of arrival
& departure is not known then both such days
are assumed to have been stayed in India.
& last but not the least, due to a proviso
to sec 6(1),in some cases the second set of
conditions of sec 6(1) are not applicable.
i.e. In case of an Indian Citizen leaving
India permanently or for a longer duration
of time or as a crew member of an Indian ship,
the second set of conditions of Sec 6(1) are
not applicable.
Similarly, in case of an Indian Citizen or
a person of Indian Origin, who comes to India
for a visit, the second set of conditions
of Sec 6(1) are not applicable.
Meaning of Indian citizen is already known
to you from civics and for the meaning of
person of Indian origin visit our website containing online notes.
Thank you for watching the video.