Residential status of a citizen working in a tax-free country, and his taxable income

Assumptions

1. Mr. Aniket is taxed under the default regime of section 202(1), so his standard deduction is ₹75,000 (section 19(1), Table: Sl. No. 2(a)).
2. The rental income is the rent received from the Indian house, which is its annual value; no municipal tax is paid.
3. In case (b) the question gives no history before 2026-27, which decides whether he is ordinarily resident: the main computation takes the likelier case (ordinarily resident), and the result if he is not is given with it.

Income computed under each head

Case (a): stay of 10 days

He is in India for less than 60 days, so he is not resident under section 6(2). But section 6(7) deems an individual resident if he:

1. is a citizen of India: yes;
2. is not liable to tax in any other country by reason of domicile or residence: yes, Bermuda levies no income-tax on him; and
3. has total income, other than income from foreign sources, above ₹15,00,000: Indian salary ₹13,25,000 + Indian house property ₹2,80,000 = ₹16,05,000, yes. The US dividend and the Bermuda income accrue outside India and are income from foreign sources (section 6(14)), even the part received in India.

He is therefore deemed resident, and a citizen deemed resident is not ordinarily resident (section 6(13)(c)).

Case (b): stay of 200 days

He is in India for 182 days or more, so he is resident (section 6(2)(a)); the 400 days in the four years before are not needed. If he was resident in India in at least two of the ten preceding tax years and in India for 730 days or more in the seven preceding tax years, section 6(13)(a) does not apply (section 6(13)(b) needs a stay of less than 182 days) and he is resident and ordinarily resident: the main computation below, ₹26,05,000. If not, he is not ordinarily resident (section 6(13)(a)); the US dividend received outside India and the Bermuda income then drop out, and his taxable income is ₹17,65,000, as in case (a).

Computation of taxable income for tax year 2026-27

A not ordinarily resident person is taxed on income received, accruing or arising in India, and on foreign income only where the business earning it is controlled in India, or the profession earning it was set up there (section 5(1)(c)); the Bermuda profession is set up outside India. An ordinarily resident person is taxed on his income from everywhere (section 5(1)).

What changed from the Income-tax Act, 1961

The residence tests are the same (sections 6(1), 6(1A) and 6(6) of the 1961 Act). The standard deduction under the default regime was ₹50,000 for assessment year 2024-25, so as set (given separately) the figures are ₹25,000 higher.