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

Arjun, an Indian citizen, left India during the tax year to take up employment in Singapore. In the earlier part of that year he stayed in India for 170 days. Over the four preceding tax years he had been in India for 1,000 days in total. What is his residential status for that tax year?

Arjun is a non-resident. A citizen who leaves India in the tax year for employment outside India cannot be made resident by the 60-day and 365-day test. He was in India for only 170 days, which is below the 182-day threshold.

  1. AResident, because he stayed 170 days and 1,000 days in the four preceding years
  2. BResident, because he stayed more than 60 days in India
  3. CNon-resident, because 170 days is less than 182 days and the second test does not apply to a citizen leaving India for employment outside IndiaCorrect
  4. DNon-resident, because he was employed abroad for the remaining part of the year

Explanation

Under section 6(3), the second test in section 6(2)(b) does not apply to a citizen of India who leaves India in the tax year for employment outside India. Only the 182-day test in section 6(2)(a) can make him resident. He was in India for 170 days, which is less than 182 days, so he is a non-resident. The first option wrongly applies the 60-day and 365-day test.

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