How to determine residential status of an individual as per Income Tax Act, 1961?
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To determine if a person is a resident in India as per the Income Tax Act 1961, he has to fulfil any of the 2 following conditions;
Condition A
The second condition above is not applicable if he is an Indian citizen leaving India for the purpose of employment, or he is a member of the crew of an Indian ship, or he is only coming to India on a visit.
If he fails to fulfil either of the two conditions, then he is termed as a non-resident.
In India, a resident person can be classified into two:
Condition B
A resident is a resident and ordinarily resident if (B):
If a person satisfies any one condition of (A) but does not follow all conditions of (B), then he is termed as a resident but not ordinarily resident.
EXAMPLE
If Nithin is living in India for 190 days in the previous year and was a resident for the previous two years only staying for 400 days in the previous 7 years, then he fulfils condition (A) but not both conditions of (B) and hence he is a resident but not ordinarily resident.