1. Compiled by Prof. M.B. Thakoor
RESIDENTIAL STATUS
PERSON
Legal Status Residential Status
Resident Non Resident
Legal Status
1. Individual Resident & Resident but
2. Firm Ordinarily Resident not Ordinarily
3. Companies Resident
4. Institution
5. Local Authorities
6. H.U.F.
7. A.O.P.
8. B.O.I.
Page No. 1

2. Compiled by Prof. M.B. Thakoor
RESIDENTIAL STATUS: SEC. 6 (1)
After determining the legal status of an Assessee u/s. 2 (31)
the Residential Status of an Assessee is to be determined.
1. Determined of every PREVIOUS YEAR:
Residential Status is determined for every previous year.
It depends on the number of days a person is in India
during the concerned previous year.
2. Different terms of Citizenship
An Individual may be a Citizen of Britain, but a resident
in India. In the same way a Citizen of India may be a
non-resident of India.
3. Residential Status is important in deciding whether
Foreign Income of a person is Taxable or not.
TEST OF RESIDENCE
1. For an INDIVIDUAL
Basic 2 conditions
An Individual is said to be resident when he satisfies
any one of the basic 2 conditions.
1. He must be in India for 182 days or more in that
relevant pervious year.
OR
2. a. He must be in India for 365 days or more
during 4 previous year immediately preceeding
the relevant previous year.
AND
b. He must be in India during that relevant
previous year for a period of 60 day or more.
Page No. 2

3. Compiled by Prof. M.B. Thakoor
EXCEPTION: FOLLOWING ARE THE TWO
EXCEPTIONS TO RULE OF STAY IN INDIA
FOR A PERIOD OF 60 DAYS IN THE SECOND
CONDITION ABOVE.
1. If a citizen of India or a member of a crew of an Indian
ship leaves India in the previous year for the purpose of
employment then he becomes resident if the 60 days are
replaced by 182 days.
Employment : Self Employment
Salaried Employed
Professional
Non-professional
i.e. he becomes resident only if he stays in India for 182
days or more and not 60 days or more.
2. A citizen of India or a person of Indian Origin staying
outside India, come on a visit to India in the previous
year, then the 60 days must be replaced by 182 days.
i.e. he become resident only if he stay’s in India for 182
days and not 60 days.
Note: A person is deemed to be of an Indian origin, if he or
his parents or any of his grand parents were born in
Undivided India. (i.e. India, Pakistan, Bangladesh)
For Current ASSESSMENT YEAR
An Individual will become a resident in India in the P.Y.
2006-2007 i.e. for current assessment year 2007-2008 if he
satisfies any one of the following 2 basic conditions.
1. He is in India for 182 days or more in the previous year
2006-2007.
OR
Page No. 3

4. Compiled by Prof. M.B. Thakoor
2. He is in India for 365 days or more during the period
1.04.2002 to 31.03.2006
AND
He is in India for 60 days or more in the pervious year
2006-2007.
EXCEPTIONS
1. If a citizen of India, or a member of crew of Indian ship,
leaves India in 2006-2007 for the purpose of employment
will became a resident only if he stays in India for 182
days or more & not 60 days during 2006-2007 and he
must be in India for 365 days or more during 4 pervious
years preceeding the P.Y. 2006-2007 i.e. He must be in
India for 365 days or more from 01/04/2002 to
31/03/2006.
2. A citizen of India or a person of Indian Origin, who is
staying outside India comes on a visit to India in
2006-20074 becomes a resident only if he stays in India
for 182 days or more (and not 60 days) during 2006-2007
and he must be in India for 365 days or more during 4
previous year preceeding the previous year 2006-2007
i.e. He must be in India for 365 days or more from
1.04.2002– 31.03.2006.
NON-RESIDENT FOR AN INDIVIDUAL
Non-resident is a person who is not a resident. An Individual
who does not satisfy the test laid down in Sec (1) above is
called a non-resident i.e. An individual who do not satisfy any
of the basic conditions above is called a non-resident.
Page No. 4

5. Compiled by Prof. M.B. Thakoor
RESIDENT & ORDINARILY RESIDENT - Sec 6 (6)
If an Individual satisfies the test of Resident then further 2
tests are to be made i.e. If an Individual is a Resident in India,
he may be either Resident and Ordinarily Resident or
Resident but not ordinarily resident.
An Individual may be Resident and Ordinarily Resident if he
satisfies following 2 conditions.
1. He has been resident in India for at least 2 out of 10
years immediately preceeding the previous year.
AND
2. He has been present in India for a period of 730 days or
more during 7 years immediately preceding the
previous year.
Current A.Y. 2007-2008
Thus during the current Assessment Year 2007-2008 a
Resident Individual is tested as an Ordinary resident. If
1. He has been a resident in India for at least 2 out of 10
years immediately preceeding the P.Y. 2006-2007.
1. 1996-1997
2. 1997-1998
3. 1998-1999
4. 1999-2000
5. 2000-2001
6. 2001-2002
7. 2002-2003
8. 2003-2004
9. 2004-2005
10. 2005-2006
i.e. from 1st April 1996 to 31st March 2006 for these 10 years
he must have been a resident for 2 years i.e. from
1.04.1996-31.03.2006.
Page No. 5

6. Compiled by Prof. M.B. Thakoor
2. He has been physically present in India for a period of
730 days or more during 7 years immediately preceeding
the previous year 2006-2007.
1. 1999-2000
2. 2000-2001
3. 2001-2002
4. 2002-2003
5. 2003-2004
6. 2004-2005
7. 2005-2006
i.e. He must have stayed in India physically for 730 days from
1.04.1999 – 31.03.2006.
If both the above conditions are satisfied then the Individual is
Resident and Ordinarily Resident. But if the additional 2
tests are not satisfied by an Individual then he is said to be
Resident but not Ordinarily Resident.
Counting of Days
While counting of number of days in all the above cases the
following points are to be noted.
1. The stay need not be at the same place.
2. The stay need not be continuous.
3. Where the stay is for part of the day, physical presence
should be calculated on timely basis. Stay of 24 Hrs.
will be counted as stay for 1 day. Where such
information is not available, both the days of entry and
exit will be counted as full days.
4. A stay in a boat anchored in territorial area of India, is
treated as stay in India.
Page No. 6

7. Compiled by Prof. M.B. Thakoor
RESIDENTIAL STATUS FOR HUF SEC 6 (2)
A Hindu Undivided Family (HUF), is said to be resident in
India IF ITS CONTROL AND MANAGEMENT IS
SITUATED IN INDIA either WHOLLY OR PARTLY during
that PREVIOUS YEAR.
A Resident HUF is an ORDINARILY RESIDENT if the
KARTA or MANAGER of the Family is a Resident and
Ordinarily Resident.
A Hindu Undivided Family (HUF), is said to be ‘NON
RESIDENT’ in India. IF ITS CONTROL AND
MANAGEMENT IS SITUATED WHOLLY OUTSIDE
INDIA during that PREVIOUS YEAR.
CONTROL AND MANAGEMENT IS SITUATED AT A
PLACE WHERE THE HEAD/BRAIN, THE SEAT OF THE
DIRECTING POWER IS SITUATED.
RESIDENT BUT NOT ORDINARY RESIDENT Sec.(6) (g)
A HINDU UNDIVIDED FAMILY IS SAID TO BE ‘NON
ORDINARILY RESIDENT IN INDIA in any previous year if
its Manager is treated as an ‘NOT ORDINARILY
RESIDENT’ in India during that previous year.
Page No. 7

8. Compiled by Prof. M.B. Thakoor
RESIDENTIAL STATUS FOR A COMPANY Sec. 6 (3)
A COMPANY SAID to be ‘Resident in India’ in any previous
year if –
1) It is an INDIAN COMPANY
OR
2) DURING THAT YEAR THE CONTROL AND
MANAGEMENT OF ITS AFFAIRS IS SITUATED
WHOLLY IN INDIA.
THUS AN INDIA COMPANY IS ALWAYS RESIDENT IF
CONTROL & MANAGEMENT IS IN INDIA OR OUTSIDE
INDIA.
FOREIGN COMPANY IS ALWAYS RESIDENT IF
CONTROL & MANAGEMENT OF ITS AFFAIRS IS
SITUATED WHOLLY IN INDIA, DURING THAT YEAR.
CONTROL & MANAGEMENT indicates THE HEAD AND
BRAIN WHICH DIRECT THE AFFAIR OF THE
COMPANY IN RESPECT OF ITS POLICY, FINANCE,
DISPOSAL OF PROFIT, MANAGEMENT ETC. i.e. PLACE
WHERE THE MEETING OF ITS BOARD OF DIRECTOR
ARE HELD.
Page No. 8

9. Compiled by Prof. M.B. Thakoor
RESIDENTIAL STATUS OF A FIRM OR AN ASSOCIATION
OF PERSON EVERY OTHER PERSON S 6(4)
A PARTNERSHIP FIRM OR AN ASSOCIATION OF
PERSONS (AOP) OR EVERY OTHER PERSON IS SAID
TO BE A RESIDENT IN INDIA IF THE CONTROL AND
MANAGEMENT OF ITS AFFAIRS ARE SITUATED IN
INDIA EITHER WHOLLY OR PARTLY during that
pervious year.
A PARTNERSHIP FIRM OR AN ASSOCIATION OF
PERSONS (AOP) or every other person is SAID TO BE
NON RESIDENT IN INDIA IF ITS CONTROL AND
MANAGEMENT IS SITUATED WHOLLY OUTSIDE
INDIA during THAT PREVIOUS YEAR.
“CONTROL AND MANAGEMENT IS SITUATED AT A
PLACE WHERE THE HEAD/BRAIN THE SEAT OF THE
DIRECTING POWER IS SITUATED”.
Page No. 9