Assesses have been divided into three categories on the basis of residence. How these categories affect the tax liability of an assesses? Explain defining these categories.
Section 5 of the Income-tax Act deals with the scope of total income. It states that the scope of the total income of a person is determined by reference to his residence in India in the previous year.
आयकर अधिनियम की धारा 5 कुल आय के दायरे से संबंधित है यह प्रकट करता है की एक व्यक्ति की कुल आय का दायरा पिछले वर्ष भारत में अपने निवास के संदर्भ द्वारा निर्धारित किया जाता है।
On the basis of residence, all taxable entities are divided into three categories –
a) Persons who are residents in India
b) Persons who are not ordinarily residents in India
c) Persons who are non-residents in India
निवास के आधार पर सभी कर योग्य संस्थाओं को तीन श्रेणियों में विभाजित किया गया है
क) भारत में रहने वाले व्यक्तिएं बी) व्यक्ति जो सामान्यतः भारत में निवास नहीं करते हैं सी) भारत में गैर-निवासियों वाले व्यक्ति
Residents Nan-Ordinarily Non-residents
For the purpose of determining the rules applicable in this regard, the assessees are divided into 4 groups,
ii) Non-company plural entities,(H.U.F., firms or other association of persons)
iii) Companies, and
iv) Every other person.
RULES FOR DETERMINING THE RESIDENTIAL STATUS
As stated earlier there are separate rules for determining the residential status of different types of assesses. The tests for residence of an individual are contained in Section 6(1), those for Hindu Undivided Families, firms, or other association of persons are laid down in Section 6(2), those for companies in Section 6(3), and for every other person in Section 6(4).
आवासीय स्थिति के निर्धारण के लिए नियम
जैसा कि पहले कहा गया है कि आवासीय स्थिति का निर्धारण करने के लिए अलग नियम हैं - मूल्यांकन के विभिन्न प्रकार धारा 6 (1) में हिंदू अविभाजित परिवारों, फर्मों या अन्य संगठनों के लिए धारा 6 (2), धारा 6 (3) में कंपनियों के लिए और प्रत्येक के लिए निर्धारित किए गए हैं। धारा 6 (4) में अन्य व्यक्ति
An individual may either be resident, or not ordinarily resident, or non-resident, in any previous year depending upon the facts of the case.
मामले के तथ्यों के आधार पर किसी भी व्यक्ति का निवासी या सामान्य रूप से निवासी या गैर-निवासी, पूर्ववर्ती वर्ष में हो सकता है.
The residential status of an individual now depends upon his stay in India, prior to the previous year 1982-83 his dwelling place was also relevant. He will be a resident in India (also referred to as ordinarily resident) if he satisfies any one of the conditions of Part I and both the condition of Part II. एक व्यक्ति की आवासीय स्थिति अब भारत में अपने प्रवास पर निर्भर करती है, पूर्व वर्ष 1 9 82-83 से पहले उसका निवास भी प्रासंगिक था। वह भारत में एक निवासी (सामान्य रूप में निवासी भी कहा जाता है) यदि वह भाग I की शर्त के किसी भी व्यक्ति को संतुष्ट करता है और भाग II की शर्त दोनों के रूप में होगा।
Conditions of Part I (Sec. 6(1) )
a) He is in India in the previous year for a period, or periods amounting in all to 182 days or more, b) If he has been in India for a period or periods amounting in all to 365 days or more during the 4 years preceding the previous year and has been in India for 60 days or more during the previous year.
भाग I की शर्तों (धारा 6 (1))
क) वह पिछले वर्ष में एक अवधि के लिए भारत में है, या 182 दिनों या उससे अधिक की अवधि में है, बी) यदि वह पिछले वर्ष के 4 वर्षों के दौरान 365 दिनों या उससे अधिक की अवधि या अवधि के लिए भारत में रहा है और पिछले वर्ष के दौरान 60 दिनों या उससे अधिक के लिए भारत में रहा है।
Explanations: In the case of an individual
i) Being a citizen of India if he leaves India in any previous year for the purpose of employment outside India, the period of 60 days in clause (b) above will be extended to 182 days or more. ii) Being a citizen of India or a person of Indian origin, who being outside India, comes on a visit to India in any previous year the period of 60 days mentioned in clause (b) will be 90 days or more (From 1.4.1990 these 90 days are extended to 150 days or more). A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents were born in undivided India.
i) अगर भारत के बाहर रोजगार के उद्देश्य के लिए किसी भी पिछले वर्ष भारत छोड़ता है तो भारत का नागरिक होने के बाद, उपरोक्त धारा (बी) में 60 दिनों की अवधि 182 दिन या इससे अधिक की जाएगी ii) भारत के नागरिक होने के नाते या भारतीय मूल के एक व्यक्ति, जो भारत से बाहर है, किसी भी पिछले वर्ष में भारत की यात्रा पर आता है, खंड (बी) में वर्णित 60 दिनों की अवधि 90 दिन या उससे ज्यादा होगी (1.4 से 1990 इन 90 दिनों 150 दिन या उससे अधिक तक बढ़ाया गया है) एक व्यक्ति को भारतीय मूल के समझा जाता है कि यदि वह, या उसके माता-पिता या उसके किसी भी भव्य माता-पिता अविभाजित भारत में पैदा हुए थे
Conditions of Part II (See. 6(6) )
a) If he has been resident in India in at least 9 out of the 10 years preceding the previous year, and. b) He has been in India for a period or periods amounting in all to 730 days or more during 7 previous years preceding the previous year.
भाग II की शर्तें (देखें 6 (6))
क) यदि वह पिछले वर्ष के 10 वर्षों में कम से कम 9 वर्षों में भारत में निवासी है, और बी) वह भारत में पिछले 7 वर्षों के दौरान 730 दिनों या उससे अधिक समय की अवधि (यानी पिछले वर्ष) के लिए भारत में रहे हैं
Stay in India
His stay in India for at least 182 days during the previous year need not necessarily be a continuous one and at the same place, It is the total duration of his stay in India that will be considered for the purpose. It is immaterial whether he stayed in a rented 'house, or his own house, in a hotel or with some friends, whit is important is that he must have stayed in India for a period of 182 days or more in the previous year.
Regarding his stay for at least 365 days, the stay may be regular or irregular or only once in four years preceding the previous year. But he must have stayed in India 365 days in all during the four years. The period of 4 years preceding the previous year means the period of 12 calendar months each immediately preceding the commencement of the relevant previous year.
Again with regard to the second condition of Part I i.e. his stay for 365 days or more, the stay need not be regular, it could be only once in four years preceding the previous year. It is the total stay that is significant which must be 365 days or more in the 4 years preceding the previous year.
B. Not Ordinarily Resident
If an individual satisfies any one of the two conditions of Part I, but does not satisfy both the conditions of Part II, he is said to be resident but not ordinarily resident or simply stated. He will be a "not ordinarily resident".
If an individual does not satisfy any one of the conditions of Part I is said to be, non-resident in that previous year. Whether he satisfies one or both conditions of Part II.
2 Non-Company Plural Entities
Under this section, we will examine the rules regarding the residential status of plural entities such as Hindu Undivided Family (HUF), firms, and the association of persons.
Hindu Undivided Family (Section 6(2))
The residential status of a HUF depends on two factors, the location of control and management of its affairs and the residential status of its Karta:
Ordinarily Resident (Section 6(2) )
A) HUF is said to be ordinarily resident in India in any previous year : a) If the control and management of its affairs are wholly or partly situated in India during the previous year.
The expression 'Control and Management' signifies controlling and directive power. In other words, it means the 'head and brain.' Moreover, the control and management should be de facto, (in effect) and not merely the right or power to control and manage. If its manager (Karta) satisfies the following conditions of Section 6(6) :
i) its manager has been resident in India in 9 out of 10 previous years preceding that year; and ii) its manager has, during the 7 years preceding that year, been in India for a period amounting in all to 730 days or more. For the purposes of calculating the period of the manager's stay in India we shall add up, the stay in India of all the successive managers of the family, in case of the death of the first manager.
B) Not Ordinarily Resident
A Hindu Undivided Family is said to be 'not ordinarily resident in India if control and management of its affairs are situated wholly or partly in India during the previous year but its manager does not satisfy the conditions of Section 6(6).
A Hindu Undivided Family is said be non-resident in such cases only where its control and management is situated wholly outside India during the previous year. If however the control and management are situated partly in India and the Karta satisfies the conditions of Part II Section 6(6) it becomes a resident in India.
Firms and other Association of Persons (Section 6(2) 1
Firms and other associations of persons can fall under two categories only. They may either be residents or non-residents. The category of non-ordinarily residents does not apply to such assessee.
A firm or other association of persons is said to be resident in India in any previous year where during that year the control and management of its affairs is partially or wholly situated in India. The residential status of its partners in India is immaterial.
A firm or an association of persons is said to be non-resident in such cases only where the control and management of its affairs are situated wholly outside India during the previous year.
3 Companies (Section 6(3) )
Similar to firms, or other associations of persons, companies can also be classified into two categories only. A company may either be a resident or non-resident.
A company is said to be resident in India in any previous year if:
i) it is an Indian company, or ii) during the year, the control and management of its affairs are situated wholly in India.
Indian Company: Section 2(26)
Indian company means a company formed and registered under the Companies Act, 1956 and includes:
i) a company formed and registered under any law relating to companies formerly in force in any part of India, other than the state of Jammu and Kashmir and the union territories, ii) a corporation established by or under a central, or state or provincial act. iii) any institution, association, or body which is declared by the Central Board of Direct Taxes to be a company under Section 2(17). iv) in the case of Jammu and Kashmir, a company formed and registered under any law for the time being in force in that state. v) in the case of any of the union territories of Dadra and Nagar Haweli. Daman and Diu and Pondicherry, a company formed and registered under any law for the time being in force in that union territory.
In all the above cases, it is necessary that the registered or, as the case may be, the office of the company. corporation institution, association, or body is in India.
Control and Management of the Affairs of the Company
A non-Indian company is a resident in India if the control and ~nanagement is wholly situated in India. The term "Control and Management" refers to the "head and brain" which directs the affairs of policy framing, finance, disposal of profits, and vital things concerning the management of a company. A company may be resident in India even though its entire trading operations are carried on abroad. If the management and control are situated in India, the company is resident in India. It does not matter where it is registered and where the act of selling and buying of the goods takes place.'
If a company does not satisfy any of the aforesaid conditions of residence, it is said to be a 'non-resident' company. In other words, if the company is not registered in India and its control and management is situated wholly or partially outside India, it is regarded as a non-resident.