Residential Status

Meaning of Representative Assessee under 160 of Income Tax Act

January 17, 2013January 17, 2013 admin 2 Comments

Meaning of Representative assessee(RA) as per section 160 of the Income Tax Act, 1961.

Following Person will be treated as Representative assessee (RA) Under Income Tax Act .i.e Also know as Category of Representative Assessee for Apply PAN Card Application

Agent Defined Under Section 163 for non-resident (Read Section 163: RA in Special Cases)
Guardian or Manager for minor, lunatic or idiot
Trustee for trust declared by a duly executed instrument in writing
Trustee who is appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees.

Every representative assessee shall be deemed to be an assessee for the purposes of this Act which means all the provisions of Income tax will be applicable on RA for the Income of other person.

Reference Section 160 of the Income Tax Act, 1961: Representative Assessee(RA)

160. (1) For the purposes of this Act, “representative assessee” means—

(i) in respect of the income of a non-resident specified in sub-section (1) of section 9, the agent of the non-resident, including a person who is treated as an agent under section 163;

(ii) in respect of the income of a minor, lunatic or idiot, the guardian or manager who is entitled to receive or is in receipt of such income on behalf of such minor, lunatic or idiot;

(iii) in respect of income which the Court of Wards, the Administrator- General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager;

(iv) in respect of income which a trustee appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees;

(v) in respect of income which a trustee appointed under an oral trust receives or is entitled to receive on behalf or for the benefit of any person, such trustee or trustees.

Explanation 1.—A trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] shall be deemed, for the purposes of clause (iv), to be a trust declared by a duly executed instrument in writing if a statement in writing, signed by the trustee or trustees, setting out the purpose or purposes of the trust, particulars as to the trustee or trustees, the beneficiary or beneficiaries and the trust property, is forwarded to the ⁵³[Assessing] Officer,—

(i) where the trust has been declared before the 1st day of June, 1981, within a period of three months from that day; and

(ii) in any other case, within three months from the date of declaration of the trust.

Explanation 2.—For the purposes of clause (v), “oral trust” means a trust which is not declared by a duly executed instrument in writing [including any wakf deed which is valid under the Mussalman Wakf Validating Act, 1913 (6 of 1913),] and which is not deemed under Explanation 1 to be a trust declared by a duly executed instrument in writing.]

(2) Every representative assessee shall be deemed to be an assessee for the purposes of this Act.

Meaning of Agent Under Income Tax and Representative Assessees for NRI

January 10, 2013March 4, 2014 admin Leave a comment

Who is Treated as Agent for Non Resident India (NRI) under Income Tax? Following Person are treated as Agent for NRI under Income Tax Act.

Person Employed by or on behalf of NRI
Person having Business Connection with NRI (Business Connection defined in Section 9)
Person from or through whom NRI receives any sum
Trustee of NRI

and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India :

Provided that a broker in India who, in respect of any transactions, does not deal directly with or on behalf of a non-resident principal but deals with or through a non-resident broker shall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:—

the transactions are carried on in the ordinary course of business through the first-mentioned broker; and
the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal.

Who may be regarded as agent : Representative assessees NRI Special cases

163. (1) For the purposes of this Act, “agent”, in relation to a non-resident, includes any person in India—

(a) who is employed by or on behalf of the non-resident; or

(b) who has any business connection with the non-resident; or

(d) who is the trustee of the non-resident;

and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India :

(i) the transactions are carried on in the ordinary course of business through the first-mentioned broker; and

(ii) the non-resident broker is carrying on such transactions in the ordinary course of his business and not as a principal.

Explanation.—For the purposes of this sub-section, the expression “business connection” shall have the meaning assigned to it in Explanation 2 to clause (i) of sub-section (1) of section 9 of this Act.

(2) No person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such.

How to determine residential status of firm and association of Person Sec. 6(2) of the Income Tax Act

December 31, 2012December 31, 2012 admin 2 Comments

A Firm and AOP (like a HUF) is either resident in India or Non-resident in India.

When a Firm and AOP is “Resident”

Control and management of affairs wholly / partly in India and partly outside India

When a Firm and AOP is “Non-resident”:

Control and management of affairs wholly outside India

Note: A firm and association of person cannot be “ordinary” and “not ordinary resident”.

Reference: section 6 of Income Tax Act, 1961

Residence in India

For the purposes of this Act,—

(1). An individual is said to be resident in India in any previous year, if he—

is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or
having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.—In the case of an individual,—

being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted.

(2). A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3). A company is said to be resident in India in any previous year, if—

it is an Indian company ; or
during that year, the control and management of its affairs is situated wholly in India.

(4). Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.

(5). If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.

(6). A person is said to be “not ordinarily resident” in India in any previous year if such person is—

an individual who has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
a Hindu undivided family whose manager has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

How to Determine Residential Status of a Company under section 6 of the Income Tax

December 31, 2012December 31, 2012 admin Leave a comment

As Per section 6(3) of the Income Tax Act, any company which is incorporated in India is always considered as resident company or during the year control and management of its affairs situated wholly in India.

Indian company:

An Indian company always resident in India.

Foreign Company:

When a foreign company is “resident”:

Control and management of affairs of a company wholly In India.

When a foreign company is “non-resident”:

Control and management of affairs of a company wholly outside India and partly in India and partly outside India.

Reference: section 6 of Income Tax Act, 1961

Residence in India

For the purposes of this Act,—

(1). An individual is said to be resident in India in any previous year, if he—

is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or
having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.—In the case of an individual,—

being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted.

(2). A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

(3). A company is said to be resident in India in any previous year, if—

it is an Indian company ; or
during that year, the control and management of its affairs is situated wholly in India.

(6). A person is said to be “not ordinarily resident” in India in any previous year if such person is—

an individual who has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
a Hindu undivided family whose manager has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

How to determine residential status of an individual under Section 6(1) of the Income Tax Act

December 31, 2012December 31, 2012 admin 3 Comments

An Individual can either be:

Resident and ordinary resident in India
Resident but not ordinary resident
Non-resident in India

Resident and ordinary resident

To find out whether an Individual is “Resident and ordinary resident” in India, following two steps are satisfied-

Step 1: An individual is “Resident” in India

Step 2: If such Individual is “Resident” in India, then find out whether he is “ordinary resident” in India or “Non-resident” in India

Step 1: An individual is “Resident” in India

An individual is said to be Resident in India in any previous year if he satisfied one of the following basic conditions –

He has been in India in the previous year for 182 days or more
He has been in India in the precious year for 60 days or more and 365 days or more during 4 years immediately preceding the previous year

If any one of the following Basic condition is satisfied then an Individual is treated as “Resident” in India if not satisfied an Individual is treated as “Non-resident” in India

Step 2: An Individual is “ordinary Resident” or “Non-resident” in India

If an Individual is Resident in India, then the following both additional conditions are satisfied for “ordinary resident”

He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year.
He has been in India for 730 days or more during 7 years immediately preceding the relevant previous year.

If the both additional condition and one Basic are satisfied, an Individual is treated as “Resident and Ordinary resident” in India and

Resident but not ordinary resident

If any one of Basic condition is satisfied and any one of the following additional condition is not satisfied, an Individual is treated as “Resident but Not ordinary Resident” in India

Reference: section 6 of Income Tax Act, 1961

Residence in India

For the purposes of this Act,—

(1). An individual is said to be resident in India in any previous year, if he—

is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or
having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.—In the case of an individual,—

being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted.

(3). A company is said to be resident in India in any previous year, if—

it is an Indian company ; or
during that year, the control and management of its affairs is situated wholly in India.

(6). A person is said to be “not ordinarily resident” in India in any previous year if such person is—

an individual who has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
a Hindu undivided family whose manager has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

How to find out residential status of a Hindu undivided family Section 6(2) of the Income Tax Act

December 31, 2012December 31, 2012 admin Leave a comment

A Hindu undivided family (like an Individual) is either resident in India or Non-resident in India.

A resident Hindu undivided family is either ordinary resident or not ordinary resident.

When a Hindu undivided family is “Resident”

Control and management of affairs wholly / partly in India and partly outside India

When a Hindu undivided family is “Non-resident”:

Control and management of affairs wholly outside India

When a resident Hindu undivided family is “ordinary resident” or “Not ordinary resident”: Read How to determine residential status of an individual under Section 6(1) of the Income Tax Act

A resident Hindu undivided family is an “ordinary resident” in India if Karta or manager of the HUF satisfies the following two additional conditions –

Karta has been resident in India at least 2 out of 10 previous years immediately preceding the relevant previous year
Karta has been present in India for 730 days or more during 7 years immediately preceding the previous year

If Karta of HUF does not satisfy the two additional conditions, the HUF is treated as resident but not ordinary resident. Read How to Determine Residential Status of a Company under section 6 of the Income Tax

Reference: section 6 of Income Tax Act, 1961

Residence in India

For the purposes of this Act,—

(1). An individual is said to be resident in India in any previous year, if he—

is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or
having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation.—In the case of an individual,—

being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted.

(3). A company is said to be resident in India in any previous year, if—

it is an Indian company ; or
during that year, the control and management of its affairs is situated wholly in India.

(6). A person is said to be “not ordinarily resident” in India in any previous year if such person is—

an individual who has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
a Hindu undivided family whose manager has been a non-resident in India 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 a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.