After 25 years stay in India, Mr. Ram went to U.S.A on April 15, 2012 and come back to India on March 12, 2020. Determine his residential status for the assessment year 2020-2021.
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Answer:
Taxability of income in India depends on the source of income, the residential status and the place of receipt of income.
Any income, the source of which is located in India, is taxable in India, irrespective of the residential status. Residential status is determined on the basis of physical presence of an individual in India during a financial year (i.e. from 1 April to 31 March) (including work days and non-work days) and the preceding 10 years. Residential status is dynamic and needs fresh determination for each year.
If the individual satisfies any of the basic conditions mentioned below, the individual would qualify as a resident, otherwise he or she would qualify as a non-resident (NR).
Basic conditions: physical presence in India during the relevant year is 182 days or more; or physical presence in India during the relevant year is 60 days* or more and 365 days or more in the preceding four years; or an Indian citizen if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other similar criteria and total income other than income from foreign sources is more than ₹15 lakh
Income from foreign sources is defined to mean income which accrues or arises outside India (except income which is derived from business controlled in or profession set up in India).
In respect of Indian citizens or persons of Indian origin, who being outside India, come on a visit to India, the 60 days threshold in second basic condition is modified as follows:
If total income other than income from foreign sources is more than ₹15 lakh, the 60 days condition is substituted by 120 days; and
In any other case, the 60 days condition is substituted by 182 days.
For Indian citizens, the 60 days condition is also extended to 182 days, if the individual has left India in the relevant year for the purpose of employment outside India or as a member of the crew of an Indian ship.
A resident may either qualify as a ‘resident and ordinarily resident’ (ROR) or resident but not ordinarily resident (RNOR). An individual may qualify as RNOR under either of the following circumstances:
Non-resident in India in nine of 10 years preceding the relevant financial year (or)
Physical presence in India is 729 days or less in the seven years preceding the relevant financial year (or)
An Indian citizen if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other similar criteria and total income other than income from foreign sources is more than ₹15 lakh (or)
An Indian citizen or a person of Indian origin, who being outside India, come on a visit to India, if his physical presence is 120 days or more but less than 182 days in India in the relevant year, his physical presence is 365 days or more in the preceding four years; and total income other than income from foreign sources is more than ₹15 lakhs.
If any of the above conditions are not satisfied, such individual may qualify as ROR in India.
An individual qualifying as NR or NOR is taxable on the following incomes:
Income accruing or arising in India;
Income deemed to accrue or arise in India;
Income received or deemed to be received in India.
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