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

Neha, a citizen of India, left India during the tax year to work in a company in Germany. She had 150 days of stay in India in that year before leaving, and she had been in India for 900 days in the four preceding years. Her stay in India during the year was 150 days in total. What is her residential status for the year under the Income-tax Act, 2025?

Neha is non-resident. As a citizen who leaves India during the year for employment outside India, the 60-day plus 365-day alternative test is not available against her. Only the 182-day test applies, and her stay of 150 days is less than that.

  1. AResident, because she was in India for 365 days or more in the four preceding years
  2. BResident but not ordinarily resident, because she left for employment
  3. CNon-resident, because she is a citizen leaving for employment outside India and her stay is under 182 daysCorrect
  4. DNon-resident, because the 60-day test is replaced by a 120-day test

Explanation

Section 6(3) states that 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) is left, and her 150 days fall short of it. She is therefore non-resident. Option A wrongly applies the 365-day test.

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