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

Mr Harish Rao, an Indian citizen resident in the UK, visits India and stays for 130 days in the tax year. His income other than foreign-source income is Rs. 20,00,000. He was in India for 500 days in total in the four preceding tax years. Over the ten preceding tax years he was non-resident in 4 years, and was in India for 1,500 days in the seven preceding tax years. He is not a deemed resident under the citizenship provision. What is his residential status?

He is resident but not ordinarily resident. The 120-day substitution makes him resident through the 365-day test, and because his Indian income exceeds Rs. 15 lakh and he stayed between 120 and 181 days, section 6(13)(b) classifies him as not ordinarily resident.

  1. ANon-resident, because he stayed less than 182 days
  2. BResident and ordinarily resident, because he satisfies the 120-day and 365-day conditions and fails the earlier tests
  3. CResident but not ordinarily resident, because his income exceeds Rs. 15 lakh and his stay is 120 days or more but under 182 daysCorrect
  4. DNon-resident, because the 365-day test does not apply to visiting citizens

Explanation

As a citizen visiting India with income above Rs. 15 lakh, 60 days is replaced by 120 days under section 6(5), and 130 days plus 500 days in the preceding four years makes him resident. Under section 6(13)(b), a citizen with such income who stayed 120 days or more but under 182 days is not ordinarily resident. So he is resident but not ordinarily resident, even though the 9-of-10 and 729-day tests are failed.

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