Page 32 - Jignyasa-June 2020

(b) a Hindu undivided family whose fifteen lakh rupees during the
manager has been a non-resident in previous year, as referred to
India in nine out of the ten previous in clause (b) of Explanation 1
years preceding that year, or has to clause (1), who has been in
during the seven previous years India for a period or periods
preceding that year been in India for amounting in all to one hundred
a period of, or periods amounting in and twenty days or more but less
all to, seven hundred and twenty- than one hundred and eighty-two
nine days or less 7 or days; or
(c) a citizen of India, or a person (d) a citizen of India who is deemed
of Indian origin, having total to be resident in India under
income, other than the income clause (1A)”
from foreign sources, exceeding

A. Impact of the amendment

Indian Citizen not liable to tax in any other
Indian Citizens or PIOs on a visit to India for country by way of residence or domicile or
120 days or more but less than 182 days, any other similar criteria, having total income,
having total income other than income from other than income from foreign sources > INR
foreign sources > INR 15 lakhs
15 lakhs

Resident but Not Ordinarily Resident

In a nutshell, as per the recent an individual who happens to qualify
amendments, for those individuals who as a Resident and Ordinarily Resident
can no longer qualify to be a Non- originally by virtue of section 6(1)
Resident but are considered to be RNOR and 6(6) but may instead take a view
in India, the only addition to their scope that Section 6(1A) applies, in order to
of total income shall be foreign Income qualify as Resident and Not Ordinarily
derived from a business controlled in or Resident. Thus, literal interpretation of
profession set up in India. Their foreign such overriding effect would not be in
income not connected to India shall accordance with the intention of the law
not be taxable in India. However, the and hence Section 6(1) shall be given
phrase “income derived from a business preference during practical application.
controlled in or profession set up in India”
has its own set of ambiguities which For a quick and easy determination of
needs to be addressed. Residential Status as per the amended
provisions, reader can refer the Flowchart
Also, it may be noted that Section 6(1A) at the end of this Article (Refer VII.
begins with a non-obstante clause, i.e. Flowchart for Residential Status of
it overrides sub-section 1 of Section 6. Individuals). Also, one can use the
However, if such literal interpretation is Residential Status Calculator available on
followed, there can be a scenario where the Income Tax India official website .
3

3. https://www.incometaxindia.gov.in/Pages/tools/residential-status-calculator.aspx

32 Learning Today … Leading Tomorrow