- August 4, 2020
- Posted by: IBA LLP
- Category: Articles, Direct Tax
Determining the residential status for income tax purposes is a big challenge for this financial year and a part of the previous financial year. This has been a topic of debate as many non – residents had to extend their stay in India, in view of the lockdown and resultant suspension of international flights due to the outbreak of COVID-19. Central Board of Direct Taxation (CBDT), on 8th May 2020, have issued guidelines regarding this and provided some clarity on this subject. In this article, we have discussed briefly about the concept of residential status, the amendments as per Budget 2020 and the circular issued by CBDT.
ERSTWHILE PROVISIONS RELATED TO RESIDENTIAL STATUS
TEST 1: – IDENTIFICATION WHETHER A PERSON IS AN INDIAN RESIDENT
An Individual is considered to be a resident if he satisfies any of the following conditions:
• whose period of stay in India is 182 days or more in the previous year or;
• whose period of stay in India is 365 days or more in 4 years preceding the previous year and 60 days or more in the previous year.
TEST 2: – IDENTIFICATION WHETEHR RESIDENT BUT ORDINARY RESIDENT OR NOT ORDINARY RESIDENT
An Individual shall be considered as RNOR in the previous year if he satisfies any of the following:
• who has been a Non-Resident (NR) in India in 9 out of the 10 previous years preceding that year, or
• who has stayed in India for a period of 729 days or less during the 7 previous years preceding that year. Readmore..
Author: Yashish Sharma