Sub-section (1) of section 6 of the Act provides for situations in which an individual shall be resident in India in a previous year.
Clause (c) thereof provides that the individual shall be Indian resident in a year, if he,-
(i) has been in India for an overall period of 365 days or more within four years preceding that year, and
(ii) is in India for an overall period of 60 days or more in that year.
Clause (b) of Explanation 1 of said sub-section provides that an Indian citizen or a person of Indian origin shall be Indian resident if he is in India for 182 days instead of 60 days in that year. This provision provides relaxation to an Indian citizen or a person of Indian origin allowing them to visit India for longer duration without becoming resident of India.
Instances have come to notice where period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year, is being misused. Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India.
Sub-section (6) of the said section provides for situations in which a person shall be “not ordinarily resident” in a previous year.
Sub-section (1) of section 6 of the Act provides for situations in which an individual shall be resident in India in a previous year.
Clause (c) thereof provides that the individual shall be Indian resident in a year, if he,-
(i) has been in India for an overall period of 365 days or more within four years preceding that year, and
(ii) is in India for an overall period of 60 days or more in that year.
Clause (b) of Explanation 1 of said sub-section provides that an Indian citizen or a person of Indian origin shall be Indian resident if he is in India for 182 days instead of 60 days in that year. This provision provides relaxation to an Indian citizen or a person of Indian origin allowing them to visit India for longer duration without becoming resident of India.
Instances have come to notice where period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year, is being misused. Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India.
Sub-section (6) of the said section provides for situations in which a person shall be “not ordinarily resident” in a previous year.
Clause (a) thereof provides that if the person is an individual who has been non-resident in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for an overall period of 729 days or less.
Clause (b) thereof contains similar provision for the HUF. This category of persons has been carved out essentially to ensure that a non-resident is not suddenly faced with the compliance requirement of a resident, merely because he spends more than specified number of days in India during a particular year.
Such a circumstance is certainly not desirable; particularly in the light of current development in the global tax environment where avenues for double non-taxation are being systematically closed. In the light of above, it is proposed that-
It is proposed that exception provided to Indian citizen/person of Indian origin is suitably amended to make him an Indian resident if he is in India for an overall period of 120 days in that particular year.
It is also proposed that an individual or an Individual or an HUF shall be said to be ‘Not Ordinarily resident’ in India in previous year, if the individual/manager of the HUF is a non – resident in India in seven out of ten previous Years preceding that year.
Further, an Indian citizen who is not liable to tax in any other country or territory by reason of his domicile or residence shall be deemed to be resident in India for the purposes of taxation and accordingly global incomes of such person may be taxed in India.