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CMA Intermediate · Direct and Indirect Taxation · Basic Concepts, Basis of Charge and Capital and Revenue Receipts

Mr. Rakesh Nair, an Indian citizen, left India on 1 August of the tax year to take up employment in Dubai. He was in India for 122 days from 1 April to 31 July of that year and for 1,000 days in the 4 preceding years. What is his residential status for that tax year?

Mr. Nair is a non-resident. As an Indian citizen who left India during the year for employment abroad, he can be resident only by staying at least 182 days in India in that year. He stayed just 122 days, so the 60-day alternative cannot make him resident.

  1. AResident, because he stayed 60 days or more in the year and over 365 days in the preceding 4 years
  2. BNon-resident, because the 60-day condition does not apply to him and he stayed less than 182 daysCorrect
  3. CResident but not ordinarily resident, because he has gone abroad for employment
  4. DResident, because he stayed 120 days or more in the year

Explanation

For an Indian citizen who leaves India during the year for employment outside India, only the 182-day condition applies; the 60-day alternative is not available. He stayed 122 days, which is below 182, so he is non-resident. The first option wrongly applies the 60-day and 365-day test.

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