Residential Status of an Individual: Tax Planning

Residential Status of an individual is required for calculating the income tax and is coined under the Income tax act . Now the residential status of an individual in India can be divided mainly  into two parts
1. RESIDENT under sec 6(1)

• Ordinary Resident
• Not Ordinary Resident

2. NON RESIDENT under sec 2(30)

1. RESIDENT(Ordinary Resident)
For being an ordinary resident of India first of all one has two fulfill any of the following two Basic conditions under sec 6(1):

a. If the individual is in India during the relevant previous year for a total period of 182 days or more.

                                                        OR

b. If an individual was in India for a total period of 60 days or more in that relevant previous year and he was in India for a period amounting in all to 365 days of more during the four years preceding the relevant previous year.

 ALSO

After fulfilling any of the above two conditions an individual becomes resident of India but in order to become an Ordinary resident of India one has to fulfill both the following two additional conditions.

a. He has been the resident of India for at least 2 previous years out of 10 previous years immediately preceding to the previous year.

                                                         AND

b. If he has stayed in India for at least 730 days in previous 7 years immediately preceding previous year.

2. RESIDENT( Not ordinary resident)

A non ordinary resident is one who satisfies any one of the basic conditions mentioned under sec 6(1) but do not satisfies any one or any of the additional conditions.

3. NON RESIDENT
A non resident of India is one who do not satisfies anyone of the basic conditions mentioned under sec 6(1) and obviously then additional conditions have no importance.