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CMA Final · Direct Tax Laws and International Taxation · Assessment of Individuals including Non-residents

Arjun, a citizen of India, is an employee who is not liable to tax in any other country because of his domicile or residence. He stays in India for 90 days in the tax year and his total income, other than income from foreign sources, is Rs. 20 lakh. Under the Income-tax Act, 2025, what is his status?

Arjun is resident but not ordinarily resident. He is a citizen with non-foreign income above Rs. 15 lakh and no tax liability in any other country, so he is deemed resident under the Act, and a person deemed resident on that basis is classified as not ordinarily resident.

  1. ANon-resident, because he stayed fewer than 182 days
  2. BResident and ordinarily resident, because he has not been non-resident in nine of the preceding ten years
  3. CResident and ordinarily resident, because the deeming rule makes every such person fully resident
  4. DResident but not ordinarily resident, because he is deemed resident under the Rs. 15 lakh ruleCorrect

Explanation

Under section 6(7), a citizen of India who is not liable to tax in any other country and whose non-foreign income exceeds Rs. 15 lakh is deemed resident. Section 6(13)(c) makes such a person not ordinarily resident. Arjun has Rs. 20 lakh of income and no other-country liability, so he is resident but not ordinarily resident. Option C is wrong because the deemed resident is not ordinarily resident.

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