CMA Final · Direct Tax Laws and International Taxation · Assessment of Individuals including Non-residents
Mr Rao, a citizen of India, has Indian-source income of Rs. 25 lakh and is not liable to tax in any other country by reason of domicile or residence. He is in India for 90 days this tax year and 300 days in the four preceding years. What is his status for the tax year?
He is resident but not ordinarily resident. He fails the 182-day and 120-day tests, but as a citizen with Indian-source income above Rs. 15 lakh who is taxable nowhere else, he is deemed resident, and such a deemed resident is classed not ordinarily resident.
- ANon-resident
- BResident but not ordinarily residentCorrect
- CResident and ordinarily resident
- DResident under the 120-day rule, and ordinarily resident
Explanation
He fails 182 days. The alternative test needs 120 days because income exceeds Rs. 15 lakh, and he has only 90, so sub-section (2) does not apply. Under the deeming rule he is a citizen, not taxable elsewhere, with Indian-source income above Rs. 15 lakh, so he is deemed resident. A citizen deemed resident under that rule is not ordinarily resident. Hence resident but not ordinarily resident, not ordinarily resident being the designated category rather than ordinary residence.
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