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UNIT - 1
Concept of Tax
• A tax may be defined as "a compulsory extraction made by Central Government from the general
public".
• It is a financial charge imposed on individuals or legal entities by the Government in pursuant to
its legislative authority.
• The proceeds from taxes constitute a major source of revenue to the government that spend the
collected amount for the common benefits of the society.

Structure of Indian Taxation System

Article 246 (Seventh Schedule) of the Indian Constitution contains the legislative powers
(including taxation) of the Union Government and the State Governments.
It contains:-
List 1:- Central List - Areas where only Parliament can make decisions
List 2:- State List - Areas where only State Legislature can make laws
List 3:- Concurrent List - Areas where both Parliament and State Legislature can make laws

Imp:- Differentiation on Shifting of Tax Burden on Direct Tax and Indirect Tax?

IMPORTANT TAXES IN INDIA

Important Taxes in India
A. Direct Taxes
1. Income Tax (Central Levy)
2. Tax on Agricultural Income (State Levy)
3. Professional Tax/Employment Tax (State Levy)

B. Indirect Taxes
1. GST (Central/ State/ UT Levy)
2. Basic Customs Duty (Central Levy)
3. State Excise Duty on certain items (State Levy)
4. Securities Transaction Test (Central Levy)

Income Tax
• It is a tax on income, gains or profits earned by a person such as individuals and other artificial
entities.

Features of Income Tax in India

1. Levied as per the constitution
2. Administered by Central Government
3. Levied by Central Government
4. Charged at Prescribed Rates
5. Direct Tax
6. Income of PY Is assessed in AY
7. Annual Tax
8. Tax on Income
9. Tax on Person
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Important Definitions - ASSESSEE (Sec 217)

Assessee means "any person by whom any tax or any other sum of money (i.e., penalty or interest)
is payable under this Act (irrespective of the fact whether any proceeding under the Act has been
taken against him or not) and includes:-
• every person in respect of whom any proceeding under this Act has been taken (whether or not he
is liable for any tax, interest or penalty) for the assessment of his income or loss or the amount of
refund due to him;
• person who is assessable in respect of income or loss of another person;
• every person who is deemed to be an assessee under any provision of this Act, and
• a person who is deemed to be an ‘assessee in default’ under any provision of this Act.

Types Of Assessee
A. Assessee
1. Ordinary Assessee
2. Representative Assessee
3. Assessee in Default

ORDINARY ASSESSEE
- Any person on whom proceedings of this act are going on
- Any person who has sustained loss and has filed return of loss u/s139(3)
- Any person by whom some amount of interest, tax or penalty is payable under this act
- Any person who is entitled to refund of tax under this act

REPRESENTATIVE ASSESSEE OR DEEMED ASSESSEE (Person liable for income

or loss of other person)
- In case of a deceased person who dies after writing his will the executors of the property of
deceased
- In case a person dies intestate (without writing his will) his eldest son or other legal heirs
- In case of a minor lunatic or idiot having income taxable under Income Tax, their guardian
- In case of non-resident having income in India, any person acting on behalf
ASSESSEE-IN-DEFAULT
- A Person is deemed to be an assessee - in - default if he fails to fulfil his statutory obligations
- In case of an employer paying salary or a person who is paying interest, it is their duty to
deduct tax at source and deposit the amount of tax so collected in Government Treasury
- If such a person fails to deduct tax at source or deduct tax but does not deposit it in the treasury,
he is known as assessee - in - default.

IMPORTANT DEFINITIONS - PERSON [Sec 2(31)]

The term person includes the following:
• an Individual;
• a Hindu Undivided Family (HUF);
• a Company;
• a Firm;
• an Association of Persons (AOP) or a Body of Individuals (BOI), whether incorporated or not;
• a Local authority; &
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• every artificial juridical person not falling within any of the preceding categories.

IMPORTANT DEFINITIONS - BLOCK OF ASSETS [Sec 2(11)]

It means a group of assets falling within a class of assets comprising
• Tangible assets being building, machinery, plant or furniture
• Intangible assets being know-how, patents, copyrights, trademarks, licenses, franchises or any
other business or commercial rights of similar nature
In respect of which same percentage of depreciation is prescribed.

It means all the assets of the same nature and having same rate of depreciation would form one
block of assets.

IMPORTANT DEFINITIONS - INCOME [Sec 224)]

• Profits and Gains
• Dividend
• Voluntary Contributions by Trust
a. Contributions received wholly or partly for charitable or religious purposes
b. Contributions received by scientific research associations
c. Contributions received by a fund or institution set up for charitable purposes and notified u/
s 10(230)
d. Contributions received by any university or other educational institution, hospital referred in
section10(23c)
• Value of perquisite or profit lieu of salary u/s 17(2)(3)
• Any special allowance or benefit other than perquisites for performance of duties of office /
employment of profit,
• Any allowance granted to employee
• Value of any benefit or amenity received by Representative Assessee
• Profits and Gains of any business of banking carried on cooperative society with its members.
• Value of any perquisite obtained from company by a director or any such person having
substantial interest in the company or relatives
• Any sum chargeable to tax u/s 28(i) and (iii a,b,c) or section 41 or section 59
• Value of any perquisite taxable u/s 28(iv)
• Any capital gain taxable u/s 45.
• Any sum whether received or receivable in cash or in kind under the agreement
• Profits or Gains of any business of insurance carried on by a mutual insurance company or by a
co-operative society
• Any winnings from lotteries, crossword puzzles, races and other games of any sort or from
gambling or betting any form or nature whatsoever.
• Any sum received under a key man insurance policy including sum allocated by way of bonus on
such policy

IMPORTANT DEFINITIONS - INCOME [Sec 2(24)]

• An aggregate amount of gifts or gifts received exceeding ₹50000
• Gifts received by a firm or closely held company as provided in Section 56(2)9(viia)
• Any consideration for issue of shares by a closely held company as exceeds the fair market value
of shares as provided in Section 56(2)(Viib)
• Any sum of money referred to in Section 56(2)(ix)
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• Any sum of money or value of property referred to in section 56(2)(x)

• Any subsidy, grant, incentive/duty drawback from government or any authority or body or
agency in cash or kind

IMPORTANT DEFINITIONS - HEADS OF INCOME [Sec 14]

According to Sec.14 of the Act, all income of a person shall be classified under the following five
heads:
- Salaries;
- Income from house property;
- Profits and gains of business or profession;
- Capital gains;
- Income from other sources.
For computation of income, all taxable income should fall under any of the five heads of income as
mentioned above.

If any type of income does not become part of any one of the above mentioned first four head, it
should be part of the fifth head, i.e. Income from other sources, which may be termed as the residual
head.

IMPORTANT DEFINITIONS - GROSS TOTAL INCOME [Sec 80B(5)]

Gross total income is the aggregate of income under all the five heads of income after adjusting the
set-off & carry forward of losses. Deductions under chapter VI-A is provided from GTI, to arrive at
Total income or taxable income.

Gross Total Income = Salary Income + House Property Income + Business or Profession Income +
Capital Gains + Other sources Income - Set off of Losses

IMPORTANT DEFINITIONS - TOTAL INCOME [Sec 2(45)]

• Total Income means the total amount of income referred to in section 5, computed in the manner
laid down in the Act.
• In other words, Total Income means income remaining after allowing deductions under chapter
VIA

Total Income = Gross Total Income-Deductions under Chapter VIA

IMPORTANT DEFINITIONS - AGRICULTURAL INCOME [Sec 2(1A)]

Agricultural income is defined under section 2(1A) of the Income-tax Act. As per section 2(1A),
agricultural income generally means:
• Any rent or revenue derived from land which is situated in India and is used for agricultural
purposes.
• Any income derived from such land by agriculture operations including processing of
agricultural produce so as to render it fit for the market or sale of such produce.
• Any income attributable to a farm house subject to satisfaction of certain conditions specified in
this regard in section 2(1A).
• Any income derived from saplings or seedlings grown in a nursery shall be deemed to be
agricultural income

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ROUNDING OFF OF TOTAL INCOME [Section 288A]

Total Income or total taxable income of the assessee shall be rounded off to the nearest multiple of
10 i.e., if the last figure in the total income is five or more, it would be raised to the next higher
multiple of 10 and if the last figure of total income is less than five, the same shall be reduced to
lower amount which should be multiple of 10.

Total Income Total Income after Rounded off

Rs 125634.80 Rs 125630
Rs 146798.50 Rs 146800
Rs 148646 Rs 148650
Rs 215614 Rs 215610
Rs 510615 Rs 510620

ROUNDING OFF OF ALL TAX [Section 288B)

The tax calculated on the total income should be rounded off to the nearest " 10. Amount of tax
(including TDS or advance tax), interest, penalty, etc. and refund shall be rounded off to the nearest
10.

Tax due/payable Tax Payable after Rounded off

Rs 2872 Rs 2870
Rs 5674.80 Rs 5670
Rs 5675 Rs 5680
Rs 8988 Rs 8990

ASSESSMENT YEAR [Section 2(9))

• "Assessment year" mean the period of 12 months commencing on the 1st day of April every year.
• In India, the Government maintain its accounts for a period of 12 months i.e., from 1st April to
31st March ever year. As such it is known as financial year. The income tax department has also
selected same year for its assessment procedure.

PREVIOUS YEAR [Section 2(34) r.w Section 3]

• Previous Year means the financial year immediately preceding the Assessment Year. Income
earned in a year is assessed in the next year.
• The year in which income is earned is known as Previous Year and the next year in which
income is assessed is known as Assessment Year.
• It is mandatory for all assessee to follow financial year (from 1st April to 31st March) as
previous year for Income-Tax purpose

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DETERMINATION OF PREVIOUS YEAR

Nature Previous Year
Continuing business It is the financial year preceding the assessment
year. As such for the assessment year 2025-26,
the previous year shall be 2024-25
Newly set up business or profession Assessee is free to set up business or start a new
profession on any day and the first year in case
of newly set up business/profession shall be on
the day it is set up and end on 31s March
following.

So previous year may be of 12 months or less

than 12 months but it can never be more
than 12 months.
Newly created source of income The Period between the day on which such
source comes into existence and 31st March
next following

UNIFORM PREVIOUS YEAR

• With effect from AY 1989-90, all assesses are compulsorily required to follow financial year as
the PY for Income tax purposes for any or all sources of income.
• However prior to that assessees were allowed to follow different PY for different sources of
income.

EXCEPTIONS TO THE RULE OF "INCOME OF P.Y IS TAXABLE IN A.Y"

This is the general rule that income of the previous year of an assessee is charged to lax in the
immediately following assessment year. However, in the following cases, income of the previous
year is assessed in the same year in order to ensure smooth collection of income tax from the
taxpayer who may not be traceable, if assessment is postponed ill the commencement of the
Assessment Year.
• Income of a non-resident assessee from shipping business (Sec. 172)
• Income of a person who is leaving India either permanently or for a long period (Sec. 174)
• Income of bodies, formed for a short duration (Sec. 174A)
• Income of a person who is likely to transfer property to avoid tax (Sec. 175)
• Income of a discontinued business (Sec. 176) In this case, the Assessing Officer has the
discretionary power i.e. he may assess the income in the same previous year or may wait til the
Assessment year.

INCOME OF A NON - RESIDENT ASSESSEE FROM SHIPPING BUSINESS - SEC

172
• The assessee is a non-resident.
• He owns a ship or ship is chartered by Non Resident
• The ship carries passengers, livestock, mail or goods shipped at a port in India
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• The non-resident may or may not have an agent representative in India

INCOME OF A PERSON WHO IS LEAVING INDIA EITHER PERMANENTLY OR

FOR A LONG PERIOD (SEC. 174)
• It appears to be the Assessing Officer that an Individual may leave India during current
assessment year or shortly after its expiry.
• He/She has no intention of returning to India
• The total income of such individual up to the probable date of his departure from India shall be
chargeable to tax in that assessment year.

INCOME OF BODIES, FORMED FOR A SHORT DURATION (SEC. 1744)

• There is an association of persons or a body of individuals or an artificial judiciary person
established or incorporated for a particular event.
• It appears to the Assessing officer that the above mentioned is likely to be dissolved in the A.Y in
which such association of persons or a body of individuals or an artificial judiciary person,
formed or established or incorporated after such assessment year.
• The total income of such association or body or juridical person from the period of expiry of P.Y
for that A.Y up to the date of its dissolution shall be chargeable to tax in that assessment year.

INCOME OF A PERSON WHO IS LIKELY TO TRANSFER PROPERTY TO AVOID

TAX (SEC. 175)
• It appears to the Assessing Officer during any assessment year that a person in likely to sell,
transfer, dispose of (or otherwise part with) any of his asset.
• Such asset may be movable or immovable.
• The tax payer is likely to be part with asset with a view to avoiding payment of any liability
under the Income Tax Act.
• The total income of such person from the first day of the assessment year to the date when
proceeding is started under sec 175 is taxable in the assessment year.

INCOME OF A DISCONTINUED BUSINESS (SEC. 176).

• A business or profession is discontinued in any A.Y
• Income of the business/profession from April 1 of the AY to the date of discontinuation may be
taxable in the A.Y in which the business/profession is discontinued.
• The above income is taxable at the discretion of the Assessing Officer in the A.Y in which
business is discontinued or it may be taxed in the normal A.Y.

CAPITAL VS REVENUE
• Income tax is levied on income of assessee and not on every receipt be receives
• Method of tax on different types of receipt is different
• Income Tax Act 1961 provides a separate head "Capital gains” to tax capital receipts.
• For calculating net taxable income of an assessee, only revenue expenses are allowed to be
deducted out of revenue receipts.
• This makes the distinction between capital and revenue of vital importance.

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C A P I TA L R E C E I P T S V S R E V E N U E R E C E I P T S - I M M AT E R I A L
CONSIDERATIONS (step 1-7)
1. Receipt in lump or in instalments
2. Nature of receipt in the hands of recipient - source of income is not important
3. Time and Quality of Receipt
4. Magnitude of receipt
5. Name given by parties and treatment in the books of accounts
6. Payment made out of capital
7. Time and Quality of Receipt

CAPITAL RECEIPTS VS REVENUE RECEIPTS - DISTINGUISHING TESTS

DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS
FIXED ASSET ✔
CIRCULATING ASSET ✔
SOURCE OF INCOME ✔
SUBSTITUTION OF INCOME ✔
COMPENSATION ON ✔

TERMINATION OF LEASE
COMPENSATION ON ✔ ✔

SURRENDER OF A RIGHT
TEST AS TO PURPOSE OF ✔ ✔

SOME LEGAL OPINIONS

DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS
Compensation relating to Stock in ✔
Trade
Excess of Amount recovered over ✔
actual cost
Compensation for Restraint, on ✔
Trading or on Exercise of
Profession
Compensation for Breach or ✔
Cancellation of Contract within
stipulated time
Compensation for Breach or ✔
Cancellation of Contract for injury
inflicted on capital assets

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DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS

Compensation received for ✔
acquisition for Zamindari Lands
Compensation for divesting the ✔
assessee of his right to manage his
business
Compensation for cancellation by ✔
the Govt of a license resulting in
cessation of business
Compensation for requisition of ✔
business premises resulting into
stoppage of assessee's business or
injury to the profit making
apparatus

DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS

Compensation for Loss of ✔
Employment. Agency or other
office or for cessation of business
Sum paid by the Government for ✔
use of requisitioned promises
Compensation for loss of profits to ✔
the assessee due to controlling and
interfening with assessee's right of
carrying on of a business.
Compensation received in respect ✔
of stock in trade damaged or
destroyed by enemy action

DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS

Nature of subsidies or Grants ✔
received from Public Bodies
Regular Royalty of Writers ✔
Complete assignment of copyrights, ✔
royalties
Recovery of Embezzled Sum ✔
Damages for Permanent Disability ✔
Damages for Temporary Disability ✔
Refund of Revenue payment ✔

DISTINGUISHING FACTOR CAPITAL RECEIPTS REVENUE RECEIPTS

Lump sum receipt or Recurrent and ✔
Periodic Income

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CAPITAL EXPENDITURE VS REVENUE EXPENDITURE

DISTINGUISHING FACTOR CAPITAL EXPENDITURE REVENUE
EXPENDITURE
FIXED ASSET ✔
CIRCULATING ASSET ✔
CAPITAL LIABILITY ✔
REVENUE LIABILITY ✔
ACQUIRE A SOURCE OF ✔
INCOME
EARN AN INCOME ✔
INCREASING THE EARNING ✔
CAPACITY
EXPENDITURE INCURRED ON ✔
KEEPING AN ASSET IN
HUNNING CONDITION
NATURE OF PAYMENT IN THE ✔ ✔
HANDS OF PAYER

CAPITAL LOSS VS REVENUE LOSS

DISTINGUISHING FACTOR CAPITAL LOSS REVENUE LOSS
FIXED ASSET ✔
CIRCULATING ASSET ✔
LOSS DUE TO ✔
EMBEZZLEMENT
LOSS DUE TO WITHDRAWAL ✔
OF MONEY FROM BANK
LOSS QUE TO LIQUIDATION OF ✔
A COMPANY
LOSS DUE TO THEFT BY AN ✔
EMPLOYEE

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UNIT - 2
BASES OF CHARGE

RESIDENTIAL STATUS
• Residential Status is a term coined under Income Tax Act and has nothing to with nationality of a
person
• Residential Status of a person depends upon the territorial connections of the person with this
country i.e., for how many days he has physically stayed in India
• Thus, An Indian, who is citizen of India can be non-resident for income tax purposes, whereas an
American who is citizen of America can be resident of India for Income Tax purposes

IMPORTANT POINTS RELATED TO RESIDENTIAL STATUS

• Residential Status of assessment year is not important
• A person may be resident in one previous year and a non-resident in India in another previous
year.
• It is the duty of the assessee to put in place relevant facts, evidence and material before the
Income Tax Authorities supporting the determination of residential status.
• A person may be resident of one or more countries in a relevant previous year - Dual Residential
Status is Possible.
• Same Residential Status for all sources of income

RESIDENTIAL STATUS OF INDIVIDUAL

Residential Status of an Individual

Resident [Section 6(1) & 6(1A)] Non Resident

1-A Ordinary Resident [Section 6(6)] 1-B Not Ordinary Resident [Section 6(6a)]

TWO BASIC CONDITIONS u/s 6(1)

A. If he is in India during the relevant previous year for a period amounting in all to 182 days or
more (Section 6(1)]
OR
B. If he was in India for a period or periods amounting in all to 365 days or more during the four
years preceding the relevant previous year and he was in India for a period or periods amounting in
all to 60 days or more in that relevant previous year [Section 6(1)]

FEW EXCEPTIONS TO BASIC CONDITIONS

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• Special Case 1: In case of individual being citizen of India who leaves India in any previous
year as a member of the crew of an Indian Ship as defined in clause (18) of section 3 of the
Merchant Stigting Act 1958 (44 of 1958) or for the purpose of employments outside India the
provisions of sub-clause (b) chall apply in relation to that year as if the words "sixty days" have
substituted by "182 days".
• In other words, an above individual will be resident in India, only if he is in India during
the relevant previous year for at least 182 days.

EXCEPTIONS
• Special Case 2: In case of an individual being citizen of India, or a person of Indian Origin
within the meaning of explanation to clause (e) of section 115 C. who being outside India,
comes on a visit to India in any P.Y, the provisions of sub clause (b) shall apply in relation to
that year as if for the words 'sixty days occurring therein the words one hundred and eighty
two days had been substituted".
• A person is deemed to be person of Indian Origin if he or either of his parents or any of his grand
parents, was born in undivided India. It may be noted that grand-parents include both maternal
and parental grand parents.
• In other words, an above individual will be resident in India, if he is in India during the
relevant previous year for at least 182 days.

CONDITION u/s 6(1A) r.w 6(6)(d) - w.e.f A/Y 2021-22 - Deemed Resident but not
ordinarily resident - Below Rule is applicable even if individuals satisfies none of the
basic conditions

Certain Individuals to be treated as Deemed Residents u/s 6(1A)

• Individual
• Citizen of India
• Have Total Income other than income from foreign sources
• This income exceeds 15 lakhs during P.Y shall be treated as Deemed Resident, if 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.

The above rule is not applicable in case of individual who becomes resident of India by
satisfying any of the basic conditions u/s 6(1). The above exception is also not applicable in
case of a foreign citizen ( even if he is a person of Indian Origin)

CONDITION u/s 6(6)(c) r.w Explanation 1(b) to Section 6(1) - w.e.f A/Y 2021-22 –
Deemed Resident but not ordinarily resident - Below Rule is applicable

Certain Individuals to be treated as Deemed Residents u/s 6(6)(c) but not ordinarily
resident
• Individual and Citizen of India or a person of Indian Origin
• Have Total Income other than income from foreign sources. This income exceeds 15 lakhs during
P.Y
• He comes to India on a visit during the relevant previous year.

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• 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.

ORDINARY RESIDENT - ADDITIONAL CONDITIONS

• After fulfilling any one of the two basic conditions, an individual becomes resident of India but
to become ordinary resident, an individual has to fulfil both the following additional
conditions as well
a. He has been resident of India in at least 2 of P.Y out of 10 previous year immediately prior
to the previous year in question
b. He has stayed in India for at least 730 days in 7 previous years immediately preceding to the
previous year in question
Day of departure and Arrivals are counted for Stay in India

RESIDENT BUT NOT ORDINARY RESIDENT - ADDITIONAL CONDITIONS

• He was non-resident in India for 9 previous years out of 10 previous years preceding the relevant
previous your
(OR)
• He was in India for a period or periods aggregating in all to 729 days of less during seven
previous years preceding the relevant previous year.

NON RESIDENT [SECTION 2(30)]

• Under section 2(30) of the income tax act, 1961 an assessee who does not fulfil any of the two
conditions in section 6(1)(a) or (b) would be regarded as Non-Resident assessee during the
relevant previous years for all purpose of this act.

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INCIDENCE OF TAX (SCOPE OF TOTAL INCOME)

• The tax is to be levied on total income of a person.
• The total income is based upon the residential status of an assessee.

Types of Income
• Indian Income - Income earned in India, Income accrues and arises in India, Income deemed to
be received in India, Income payable in India (Income may be earned in a foreign country but
payable in India), Income earned (or accrues) in India but it is received or payable outside India.
• Foreign Income - Income earned (or accrues) outside India and also received outside India, Any
Income which is not earned or accrues or arises in India.

INCIDENCE OF TAX (SCOPE OF TOTAL INCOME)

Section 5 provides the scope of total income which varies based on the status
summarized as follows

Different kinds of Resident/Ordinary Not Ordinary Non-Resident

Income Resident Resident
Income received or Taxable Taxable Taxable
deemed to be received
in India. It is
immaterial whether it
is earned in India or in
a foreign country
Income earned in India Taxable Taxable Taxable
whether received, paid
in India or outside
India
Income earned and Taxable Taxable Not Taxable
received outside India
from a business
controlled or
profession set up in
India
Income earned or Taxable Not Taxable Not Taxable
received outside India
from a business
controlled or
profession set up
outside India
Income earned and Taxable Not Taxable Not Taxable
received outside India
from any other source

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Different kinds of Resident/Ordinary Not Ordinary Non-Resident

Income Resident Resident
Income earned and Not Taxable Not Taxable Not Taxable
received outside India
in the years preceding
the P.Y in question and
if the same is remitted
to India in current P.Y

SCOPE OF TOTAL INCOME IN A NUT SHELL

• Indian income is taxable in India irrespective of the residential status of the taxpayer
• Foreign Income is taxable in the hands of residents or residents and ordinarily residents in India.
Foreign Income is taxable in the hands of non-residents
• In the hands of residents but not ordinarily residents, foreign income is taxable only:
Business income and business are controlled wholly or partly from India
Professional income from a profession that is set up in India
In any other case, foreign income is not taxable in the hands of residents but not ordinarily
resident taxpayers.
• If the aggregate amount of the gift (a sum of money or property) received by a person during the
financial year exceeds Rs50000, it is taxable as "income". This rule is, however, not applicable if
the gift is received by an individual from a relative, or at the time of marriage or by will

PROBLEMS ON RESIDENTIAL STATUS

1. X Comes to India for the first time on April 16, 2022. During his stay in India up to October
5, 2024, he stayed at Delhi up to April 10, 2024 and thereafter remained in Chennai till his
departure from India. Determine his residential status for the assessment year 2025-2026.

Relevant P.Y - 2024-2025:- 1.04.24 - 31.03.25

Calculation of No. of Days stay of Mr. X in P.Y 24-25
1.4.2024 - 10.4.2024
(Delhi) - 10 Days
11.4.2024 - 05.10.2024
(Chennai)
(20+31+30+31+31+30+5) - 178 Days
Total - 188 Days

Therefore, Mr. X fulfil the basic condition of stay in India for 182 days or more in relevant
P.Y:- 188 Days.
Thus Mr. X is a resident of India.

P.Y 22-23:- 350 Days - Resident

(14.4.22 + 31.3.23)
P.Y 23-24:- 366 Days - Resident
(1.4.23 to 31.3.24)
Total :- 716 Days
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Therefore, MR. X is Resident but not ordinarily resident as he does not fulfil conditions u/s
6(6)(a).

2. X, a foreign national (not being a person of Indian origin), came to India for the first time
on April 15, 2020. During the financial year 2020-21, 2021-22, 2022-23, 2023-24 and 2024-25,
he is in India for 130 days, 80 days, 13 days, 201 days and 75 days respectively. Determine his
residential status for the assessment year 2025-2026.

Determination of Residential Status of Mr. X

P.Y No. Of Days of Stay
2020-21 130 - Non Resident
2021-22 80 - Non Resident
2022-23 13 - Non Resident 424 Days
2023-24 201 - Resident
2024-25 75

Mr. X is a Resident of India as he fulfils condition of Stay in India for 60 Days or more in
relevant P.Y of 365 Days or more in 4 P.Y preceding the relevant P.Y

Therefore, Mr. X is a Resident but not ordinarily resident as he does not fulfil the condition of
resident in India for 2 out of 10 P.Y preceding relevant P.Y.

3. X, an Indian Citizen, leaves India for the first time on September 20, 2022 for the purpose
of employment. He came to India for 146 days on April 10, 2023. He finally comes back on
May 16, 2024. Find out his residential status for the assessment year 2025-2026.

Determination of Residential Status of Mr. X

16.5.24 to 31.3.25 - 320 Days
2023 - 24 - 146 Days
1.4.22 to 20.9.22 - 173 Days
(30+31+30+31+31+20)

Mr. X is a Resident as he fulfils basic condition u/s 6(1), basic conditions (a).

21-22 - 365 Days - Resident

20-21 - 365 Days - Resident
19-20 - 366 Days - Resident
18-19 - 365 Days - Resident
17-18 - 365 Days - Resident
16-17 - 365 Days - Resident
15-16 - 366 Days - Resident
14-15 - 365 Days - Resident
Total - 5472 Days
Mr. X fulfils the additional conditions u/s 6(6). Hence, Mr. X is a Resident but ordinarily
Resident.

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4. X is an Indian citizen. Currently he is in employment with an overseas company in Dubai.

During the different years, he is in India as follows

Previous Presence in Previous Presence in Previous Presence in

Year India Year India Year India

2024-25 55 days 2021-22 170 days 2018-19 70 days

2023-24 190 days 2020-21 200 days 2017-18 71 days

2022-23 200 days 2019-20 250 days 2016-17 72 days

For the previous year 2024-25, X is not taxable in Dubai or in any other country/territory by
reason of his domicile or residence. Income of X (other than income from foreign sources) for
the previous year 2024-25 is ₹16,00,000. Find out the residential status of X for the assessment
year 2025-2026.

Determination of Residential Status of Mr. X

For A.Y 25-26

No. Of Days of Stay

In India during P.Y = 55 Days
24-25

Even though Mr. X does not fulfil any of the basic condition u/s 6, he satisfies conditions u/s
6(1A).
A. X is an Indian citizen.
B. Has total income (other than income from foreign resources) - Rs16,00,000 exceeding
Rs15,00,000.
C. X is not taxed in any other country by nature of his residence of domicile.
Hence, Mr. X is a deemed resident but not Ordinarily Resident.

5. X is an Indian Citizen. Currently he is in employment with a multinational company and

posted in Singapore. During the previous year 2024-25, he came to India for a visit of 145
days. In earlier 4 years, he has been in India for more than 900 days. X wants to know his
residential status for the assessment year 2025-2026. His annual income for the previous year
2024-25 is as follows
Particulars ₹

Income from Salary, rent, consultancy and interest earned and 29,00,000
received in Singapore

Income from Business (accrued and received outside India, 21,00,000

controlledfrom Singapore)

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Income from another business (accrued and received outside 8,00,000

India, controlled from India)

Interest on bank fixed deposits in India 11,00,000

Any other income in India or outside India Nil

Life Insurance Premium in India 2,60,000

Determination of Residential Status of Mr. X

Total Income of Mr. X (Indian Income) = Income from business controlled in India + Interest on
Bank Fixed Deposits in India - Deductions u/s 80C (Maximum 1,50,000)
= 8,00,000 + 11,00,000 - 1,50,000
Rs17,50,000

Mr. X fulfils the conditions u/s 6(6)(c)

A. X is an Indian Citizen.
B. Has total Income (other than income from foreign resources) = Rs17,50,000 exceeding
Rs15,00,000.
C. He is in India for 145 Days (i.e. his India visit is between 180 Days or more but less than
182 Days in relevant P.Y) and stays for 900 Days (>365 Days) in 4 P.Y preceding relevant
P.Y
Therefore, X is a deemed Resident but not Ordinarily Resident.

6. X was born in Chennai in 1992. Later on, he migrated to Canada in June 2018 and took the
citizenship of that country with effect from December 26, 2023. His parents were born in
Bengal in 1960 and his grandparents were born in India in 1946. He comes to India during
2024-25 for a visit of 115 days. During earlier 4 years (i.e. April 1,2020 to March 31, 2024), he
was in India for 400 days. Find out the residential status of X for the assessment year 2025-26.

Determination of Residential Status of Mr. X

No. Of Days of Stay in India in P.Y = 115 Days

Mr. X is a person of Indian Origin (abroad) visits India during P.Y 2024-25, stay in India “60
Days” is substituted by “182 Days”.
Therefore, Mr. X is a Non-Resident.

7. Mr X, an Indian Citizen, who is appointed as Senior Taxation Officer by the Government of

Nigeria, leaves India for the first time on September 26, 2024 for joining his duties in Nigeria.
During the previous year 2025-26, he comes to India for 116 days. Determine his residential
status for assessment year 2025-2026.

Determination of Residential Status of Mr. X

P.Y 24-25
1.4.24 - 26.9.24 = 179 Days
(30+31+30+31+31+26)

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Therefore, Mr. X is a Non-Resident as he did not stay in India for 182 Days, being a person
leaving India for the purpose of Employment.

8. Mr. Anand is an Indian citizen and a member of the crew of a Singapore bound Indian ship
engaged in carriage of passengers in international traffic departing from Chennai port on 6th
June, 2024. From the following details for the PY 2024-25, determine the residential status of
Mr. Anand for AY 2025-26, assuming that his stay in India in the last 4 previous years
(preceding PY 2024-25) is 400 days
Particulars Date

Date entered into the CDC (Continuous Discharge Certificate) in respect of 6th June, 2024
joining the ship by Mr. Anand

Date entered into the CDC (Continuous Discharge Certificate) in respect of 9th December,
signing off the ship by Mr. Anand 2024

Mr. Anand is a Crew Member of Indian ship

6th June 2024 to 9th December 2024 = 25+31+31+30+31+30+9 = 187 Days
Therefore, Mr. X stays in India = 365 Days - 187 Days = 178 Days
Mr. X is a Non-Resident as he did not stay I n India for 182 Days in P.Y 2024-25 being crew
member of Indian Ship.

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