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If any of the following conditions is satisfied, an individual shall fall in Exceptions to the Basic Condition. In exceptions second condition of basic condition is not applicable. Only first basic condition is required to be checked.

If an Indian citizen leaves India for the purpose of Employment. Employment include self employment. It means taking a job outside India, shifting his place of business or profession outside India. Employment does not mean leaving India for Education, Export promotion, Tour, Training, Tourist, playing cricket, acting, conference, seminars.
If an Indian citizen leaves India as a crew member of an Indian ship. Even if a person joins as a crew member of a foreign ship he shall fall in exception since he is leaving India for employment purpose; or
If an Indian citizen comes on a visit to India from outside India. Visit means such person shall return back.
If a person of Indian origin being outside India comes on a visit to India.

Explanation to Section 115C(e) Person of Indian Origin
A person shall be deemed to be of Indian origin if he or either of his parents or any of his grandparents was born in undivided India. Date of birth before 15-8-1947 and place of birth India, Pakistan or Bangladesh.

P4 : Determine whether Mr. Taxcrazy a citizen of Sri Lanka is a person of Indian origin in the following cases:
1. Mr. Taxcrazy was born in Karachi on 1-6-1944.
2. Mr. Taxcrazy was born in Karachi on 1-6-1948 and his father was born in India in the year 1930.
3. Mr. Taxcrazy was born in Delhi on 1-6-1970 and leaves his Indian citizenship. His father was born in Karachi in the year 1950. His grandfather was born in the year 1930 in England. His grandmother was born in Bangladesh in the year 1931.

Ans : Yes in all cases he is a Person of Indian Origin

P5 : Short questions and answers
1. When only first condition of basic condition is required to be checked i.e. 182 days condition?
2. Who are the individuals who can fall in exception to the basic condition?
3. Which individual can never fall in exception to the basic condition?

Solution
1. When an individual falls in exception to the basic condition.
2. It is either Indian citizen or if a foreign citizen then he should be a Person of Indian Origin.
3. A foreign citizen who is not a Person of Indian Origin.

P6: Determine whether in following cases an individual falls in exception or not if he is an (i) Indian Citizen
(ii) Person of Indian Origin (iii) Foreign Citizen.

		IC	FC + Pio	FC
1.	Leaves India for taking up job in USA.
2.	Leaves India to join as a crew member of an Indian ship.
3.	Leaves India to join as a crew member of a foreign ship.
4.	Leaves India for export promotion.
5.	Leaves India as a tourist for 2 years.
6.	Comes to India on a visit from outside India.
7.	Comes to India to join as a manager in an Indian company.
8.	Comes to India for permanent settlement.

ans: (i) Yes; Yes; Yes; No; No; Yes; No; No. (ii) No; No; No; No; No; Yes; No; No; (iii) No in every case

Tips to solve residential status of an individual

Determine his citizenship. If foreign citizen check whether person of Indian origin or not. To check person of Indian origin check 2 conditions. (a) Date of birth. (b) Place of birth.
Check whether an individual falls in exception to the basic condition or not.
Check the basic condition.
Check the additional condition.

P7: X, Y, Z, K, Q being foreign citizens and Mr. M being an Indian citizen, all of them at some point or another
come to India for different purpose as shown below. You are required to determine their residential status for the AY 2017-18 assuming that in the PY 2014-15 all were in India for 365 days.

Name of person	Date of Birth & Place of birth	Number of days they are present in India	Purpose of coming to India
Mr. X	13-8-1947 (Hyderabad)	Arrived in India on 11-10-2016	To join as a manager in Foreign Company
Mrs. Y	25-7-1947 (Shanghai)	83 days	To argue a case in Supreme Court
Mr. Z	19-6-1996 (Nagaland)	160 days	For acting in a film
Mr. K	18-8-1972 (his grandfather is Mr. X)	67 days	To attend his daughter’s marriage.
Mr. Q	24-2-1973 (Japan) (his mother is Mrs. Y)	70 days	On his marriage
Mr. M (X is a brother of Mr. M)	19-6-1960 (Italy)	181 days	Business Trip

Ans: X, Y, Z, Q are Resident. K & M are Non-Resident

Section 6(6). Additional Condition

He has been resident in India in atleast 2 out of 10 previous years immediately preceding the relevant previous year; and
He has been in India for atleast 730 days during 7 years immediately preceding the relevant previous year.

There are two additional conditions, (a) and (b): If both the additional conditions are satisfied then residential
status is R-OR otherwise residential status is R-NOR.

Section 6(1) and 6(6). Analysis

	Basic Condition	Additional Condition	Residential Status
Case 1	Satisfies	Satisfies	R-OR
Case 2	Satisfies	Do not satisfies	R-NOR
Case 3	Do not satisfies	Satisfies	Non-Resident
Case 4	Do not satisfies	Do not satisfies	Non-Resident

P1 : Mr. Taxcrazy a citizen of Mauritius, is present in India for different previous years as follows. You are
required to determine the residential status for the AY 2017-18.

Case 1		Case 2		Case 3		case 4		Case 5
2016-17	70		185		60		60		84
2015-16	60		300		91		92		60
2014-15	70		300		92		92		60
2013-14	34		300		91		92		60
2012-13	365		300		91		92		110
2011-12	182		300		-		92		20
2010-11	125		120		100		92		20
2009-10	190		300		100		92		365
2008-09	-		300		50		92		56
2007-08	-		300		60		92		21
2006-07	64		180		182		92		60
2005-06	100		180		182		92		44
2004-05	164		184		264		88		365

Ans : (1) R-OR (2) R-OR; (3) R-NOR; (4) R-NOR. (5) NR.

P2 : Compute in all cases if the father of Mr. Taxcrazy was born in India on 13-8-1947 ?

Ans: (1) NR (2) R-OR; (3) NR; (4) NR.(5) NR.

P3 : (A) Mr. Taxcrazy, a citizen of Malaysia, comes to India every year in the month of April for 100 days for the last 8 years. Find out his residential status. (B) What would be your answer if he comes to India every year for 105 days instead of 100 days? (C) What would be your answer if he comes to India every year in the month of April for 105 days for 6 years? (D) What would be your answer in the above cases if his grandfather was born on 15-6-1930 in Kanyakumari?

Ans: R-NOR; R-OR; R-NOR; NR.

P4 : (A) Mr. Taxcrazy, a citizen of Russia, has been visiting India from the previous year 2006-07 for 160 days every year in the month of October to meet his parents. However on 9-10-2016 he shifted his whole of the business from Russia to India and started living with his parents who were born in Pakistan in the year 1946. Determine his residential status for the AY 2017-18. (B) Suppose in the above question Mr. Taxcrazy comes to India on 15-3-2017 instead of 9-10-2016.

Ans: R-NOR; NR.

P5 : Q is an Indian national. He is a marine engineer and is employed with a foreign shipping company. Under the terms of his employment, he is entitled to a leave of 4 months for every 8 months of service rendered on board a ship. Q joined the company’s vessel at Mumbai on December 10, 2014 and has been sailing with one or the other of the ships of the company not touching Indian shores till October 15, 2016. One of the ships arrived at Chennai Harbor on that day for discharge of cargo when Q signed off the company’s articles entering leave.
The employment with the company is Q’s first employment and before joining the company he was residing in
India. What is the residential status of Q for the AY 2017-18?

Ans: Non-Resident.

P6 : Mr. Taxcrazy, a foreign citizen and employed in Discovery channel comes to India for the first time on an
India exploration.
Case 1: on 1-4-2014 and leaves India on 30-9-2016.
Case 2: on 4-10-2014 and leaves India on 30-9-2016.
Case 3: on 1-4-2014 and leaves India on 15-5-2016.
Determine his residential status in Case 1, 2 and 3 for the AY 2017-18.

Ans: R-OR; R-NOR; NR.

P7: Mr. X, an actor, went to USA on 1st April, 2016 for a film shooting. Due to ill health he had to stay there just
after shooting. He came back to India on 25th September, 2016. He had to go again to USA on 8th December,
2016 and returned to India on 15th Feb, 2017. What is his residential status for the assessment year 2017-18?

Ans : Assuming that he is an Indian Actor. He generally stays in India. he is going outside India for acting, i.e.
he is not going outside India for the purpose of employment, therefore do not falls in exception. He is in India
for more than 60 days and he satisfies all the remaining condition. His RS is R-OR.

P8: Mr. Tik, an Indian citizen, wants to proceed to India on leave for a period of 10 months to get his own house
constructed in Delhi. But at the same time, he wants to be treated as a non-resident during his stay here so that
his salary earned in the UK may remain totally exempt from tax in India. He does not propose to make any other visit to India during the period of his contract of service in the UK. Suggest the dates as to how he should plan his 10 months’ visit to India.
Hint: Plan his stay in India in two previous years.

Amendment NN 70/ 2015 dated 17-8-2015

For Indian Citizen being a crew member of foreign bound ship leaving / coming to India the day he joins the ship and the day he leaves by signing off shall be excluded in computing the number of days he stays in India. This shall be seen from Continuous Discharge Certificate. It means the number of days he is in ship shall be excluded.

Meaning of Control and Management of the affairs of the business
1. The residential status of group of person depends upon Control and Management. ‘The Control & Management’ means taking policy decisions in the area of (a) What to produce (b) How to produce (c) For whom to produce. Policy decisions are taken in the area of finance, marketing, production, advertising, personnel and like. There is a distinction between doing business and controlling business.

2. Generally policy decisions are taken by owner. But these policy decisions can be delegated to employees or any other person. The person who takes policy decisions has the control and management of business. The residential status of group of person shall depend upon the location of control and management of the business. The Control & Management is situated at that place where policy decisions are taken.

In the case of HUF	C & M is with Karta or its manager.
In the case of Company	C & M is with Board of Directors or MD / WTD / Manager. In this case it can be said that control and management is situated at a place where Board meetings are held.
In the case of Firm	C & M is with Partners or any other person to whom policy decisions are delegated.

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FAQs on Exceptions to the Basic Condition - Taxation - Income Tax for assessment (Inter Level)

1. What are some exceptions to the basic condition of taxation?

Ans. Some exceptions to the basic condition of taxation include tax exemptions, tax deductions, tax credits, tax deferrals, and tax incentives. These exceptions are granted by the government to specific individuals or entities to encourage certain behaviors or provide relief in certain situations.

2. How do tax exemptions work?

Ans. Tax exemptions allow individuals or organizations to exclude a certain amount of income or transactions from their taxable income. For example, in some countries, income earned from charitable activities may be exempt from taxation. This means that the exempted income will not be included when calculating the individual's or organization's tax liability.

3. What are tax deductions and how do they work?

Ans. Tax deductions are expenses or allowances that individuals or businesses can subtract from their taxable income, reducing the total amount of income subject to taxation. Common tax deductions include expenses related to education, healthcare, mortgage interest, and business expenses. By deducting these expenses, taxpayers can lower their overall tax burden.

4. What are tax credits and how do they differ from deductions?

Ans. Tax credits are different from deductions as they directly reduce the amount of tax owed, rather than reducing taxable income. A tax credit is a dollar-for-dollar reduction in the actual tax liability. For example, if an individual owes $2,000 in taxes and has a $500 tax credit, the credit will directly reduce the tax liability to $1,500.

5. Can you explain tax deferrals and how they can benefit taxpayers?

Ans. Tax deferrals allow taxpayers to postpone the payment of taxes to a future date. This can provide temporary relief by allowing individuals or businesses to defer their tax liability and use the funds for other purposes in the meantime. However, it's important to note that tax deferrals do not eliminate the tax liability entirely - they simply postpone it to a later date, usually with interest or penalties.

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