Page 27 - Jignyasa-June 2020

Residential Status for
Individuals under Indian

Income Tax Act - Impact of
Recent Amendments

Vanshika Dharod and CA Niraj Chheda

Introduction Residential Scope of Total Income

The taxability of total income of any Status
individual or an entity in India is ROR Indian Income + Foreign
dependent upon the Residential status of Income (i.e. Global Income)
such individual or entity in India. Even
before understanding the scope of total RNOR Indian Income + Foreign
Income derived from a
income laid down as per Section 5 of business controlled in or
the Income-tax Act, 1961 (the Act), one profession set up in India
has to decode Section 6 which prescribes
conditions to determine “Residence in NR Only Indian Income
India” for individuals as well as various
forms of entities. (Note: Indian Income means any income
which accrues or arises or is deemed to
In case of individuals, residential status accrue or arise in India. Also, income
is determined based on the number of which is received or deemed to be
total days of physical presence in India received in India shall be included in the
in the relevant previous year (PY) as scope of total income of all the three
well as earlier PYs. Consequently, Section categories of individuals mentioned above)
6(1) read with Section 6(6) leads to the
following three types of Residential Status Thus, it is important to correctly
for an individual in India: determine residential status in order to
ascertain the scope of total income in
1. Resident and Ordinarily Resident in India.
India (ROR)
The coverage of this article is to
2. Resident but Not Ordinarily Resident walk through the earlier conditions
in India (RNOR) for determining residential status of
3. Non-Resident in India (NR) individuals, recent changes in residential
status amended by Finance Act, 2020,
Once the residential status is determined impact of these changes on individuals
as per section 6, the scope of total and Government clarification for persons
income of an individual as per Section 5 unavailable to travel due to Covid-19
can be broadly laid down as under: pandemic.

Coverage
I. Provisions in relation to
residential status of Individuals
prior to amendment by Finance
Act, 2020

http://www.ctconline.org 27