Residential status of a company 58

24.3-1 - Even if an individual satisfies none of the two basic conditions, he is deemed to be resident but not ordinarily resident in the cases given below –■ First exception - This exception is given under section 6(1A) read with section 6(6)(d) and applicable from the assessment year 2021-22. Under this exception an individual shall be deemed to be resident but not ordinarily resident in India, if he satisfies the following 3 conditions –a. he is an Indian citizen; b. his total income (other than the income from foreign sources) exceeds Rs. 15,00,000† during the relevant previous year, and c. he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. This exception is not applicable in the case of a foreign citizen, even if he is a person of Indian origin. ■ Second exception - This exception is given by section 6(6)(c) read with Explanation 1(b) to section 6(1) and applicable from the assessment year 2021-22. Under this exception, an individual shall be deemed to be resident but not ordinarily resident in India if he satisfies the following 4 conditions –a. he is an Indian citizen or a person of Indian origin; b. his total income (other than the income from foreign sources) exceeds Rs. 15,00,000† during the relevant previous year; c. he comes to India on a visit during the relevant previous year, and d. he is in India for 120 days (or more but less than 182 days) during the relevant previous year and 365 days (or more) during 4 years immediately preceding the relevant previous year. 24.3-1a - For the aforesaid two exceptions, the following should be kept in view –■ How to find out total income of Rs. 15,00,000 - Total income for the ceiling of Rs. 15,00,000 is calculated after ignoring income from foreign sources. “Income from foreign sources” means income which accrues or arises outside India (except income derived from a business controlled in or a profession set up in India). Income which is deemed to accrue or arise in India shall be included in computation of the ceiling of Rs. 15,00,000. ■ Liable to tax - “Liable to tax” (in relation to a person and with reference to a country) means that there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently being exempted from such liability under the law of that country. ■ Person of Indian origin - A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in undivided India. 24.4 Rule of residence in brief - The Table given below summarises the rule of residence for the assessment year 2022-23—

RULE OF RESIDENCE

Who is resident and ordinarily He must satisfy at least one of the basic conditions [i.e., (a) and/or (b)*]. At the same resident in India time, he should also satisfy the two additional conditions. Who is resident but not He must satisfy at least one of the basic conditions [i.e., (a) and/or (b)*]. He may ordinarily resident in India satisfy one or none of the additional conditions. Who is non-resident resident He satisfies none of the basic conditions [i.e., he does not satisfy basic condition (a) in India and basic condition (b)*]. Additional conditions are not relevant in the case of a nonresident.

*In the two special cases mentioned in para 24.1-1, basic condition (b) is not relevant.

† For computing Rs. 15,00,000, only taxable income shall be considered. If income is exempt, it shall not be taken into consideration even if it is derived/received in India.