STATUS OF RESIDENT & NON RESIDENT UNDER FEMA & INCOME TAX
BASIC ABOUT NON RESIDENT INDIANS UNDER FEMA AND INCOME TAX :
An Indian Citizen who stays abroad for:-
- employment/ carrying on business or,
- vacation outside India or,
- stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. Persons posted in U.N. organizations and officials deputed abroad by Central/ State Government and Public Sector Undertakings on temporary assignments are also treated as non-resident.
Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens.
I. Who is a person of Indian Origin?
A. For the purpose of availing of the facilities of opening and maintenance of bank accounts and investments in shares/securities in India:
A foreign citizen (other than a citizen of Pakistan or Bangladesh) is deemed to be of Indian Origin, if
- He, at any time, held an Indian passport
- He or either of his parents or any of his grandparents was a citizen of India but virtue of the Constitution of India or Citizenship Act, 1956(57 of 1955).
A spouse( not being a citizen of Pakistan or Bangladesh ) of an Indian citizen /Indian origin is also treated as a person of Indian origin provided the Bank accounts are opened or investments in shares/securities in India are made by such persons jointly with their NRI spouses.
B. For Investment in immovable properties:
A foreign citizen (other than a citizen of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri lanka or Nepal), is deemed to be of Indian origin if,
- He held an Indian passport at any time, or
- He or his father or paternal grand-father was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).
II. NON RESIDENT INDIANS UNDER INCOME TAX ACT:
The laws in this regard are quite complicated as these it does not define who is nonresident. Rather these define who is resident and who are not ordinarily resident. Therefore, if a person does not fall in the category of resident or not ordinarily resident, he / she will be non-resident.
III. RESIDENTIAL STATUS OF AN INDIVIDUAL
Residential status of an individual or HUF or a company is of great importance in Indian Income Tax Act as the liability to pay tax in India does not depend on the nationality or domicile of the Tax payer but on his residential status. Residential Status is determined on the basis of physical presence i.e. the number of days of stay in India in any year. There are three types of status based on the stay in India:-
A. Resident:
- An individual is resident if any of the following conditions are satisfied:
- He stayed in India for 182 days or more during the previous year, or
- He stayed in India for 365 days or more during the four preceding years and stays in India for at least 60 days 9 182 days in case of an Indian citizen or a person of Indian Origin coming on a visit to India or 182 days in case of an Indian citizen going abroad for an employment) during the previous year.
Stay in India for the above criteria may be continuous or intermittent.
- Hindu Undivided Family (HUF) or firm or other Association of persons is resident of India except in cases where the control and management of its affairs is wholly situated outside India in the previous year
2. A company is resident in India if:-
- It is an Indian company, or
- During the previous year, the control and management is situated wholly in India. (c)A person resident in India, in a previous year in respect of any source of income shall be deemed to be resident in India in respect of his other sources of income.