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

Mr Sunil, a citizen of India, is not liable to tax in any other country by reason of domicile or residence. During the tax year he was in India for 40 days only. His total income excluding income from foreign sources is Rs. 22 lakh. Which statement is correct?

Sunil is resident but not ordinarily resident. As a citizen with no tax liability elsewhere and non-foreign income above Rs. 15 lakh, he is deemed resident under section 6(7) irrespective of days in India. Section 6(13)(c) classifies such a deemed resident as not ordinarily resident.

  1. AHe is non-resident because he stayed less than 60 days
  2. BHe is resident but not ordinarily resident under section 6(7) and section 6(13)(c)Correct
  3. CHe is resident and ordinarily resident because he is a citizen
  4. DHe is non-resident because section 6(7) applies only to persons staying 120 days or more

Explanation

Section 6(7) deems a citizen resident if he is not liable to tax elsewhere and his non-foreign income exceeds Rs. 15 lakh, whatever his stay. He does not qualify under sections 6(2) to 6(6), so section 6(8) does not block it. Section 6(13)(c) then makes such a deemed resident not ordinarily resident.

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