Question 1 OR (c)
Residential status of an Indian citizen employed abroad who visits India for 200 days (as set, 1961 Act, AY 2019-20)
5 marks
- Time to write
- About 10 minutes
From an older CBCS paper
Question
Question 1 OR (c) · 5 marksMr. Rakesh (40 years) is an Indian Citizen who works for ABC Ltd. (USA) in California. He visits India during the Previous Year 2018–19 for 200 days, arriving on June 01, 2018. He first left India on October 25, 2016 to take up employment outside India. Until October 25, 2016, he had never been out of India since his birth. Ascertain his residential status for Assessment Year 2019-20. 5
Paper note: The as-set version: set and answered under the Income-tax Act, 1961 for assessment year 2019-20 (previous year 2018-19), with the dates as printed. The previous year is printed "2018–19" with a dash here; it stands as printed. The paper gives his departure date (October 25, 2016) and the 200-day visit from June 01, 2018, and says nothing about other stays in India.
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- AscertainFormula first, then the working, then the answer with its unit (₹, %, units).
Write it in this order
- Read the data; note exactly what is asked 1 min
- 1 Basic conditions and Explanation 1(b) 2 marks 3 min
- 2 Additional conditions: the ten-year and seven-year tests 2 marks 3 min
- 3 Conclusion and its effect 1 mark 2 min
- Check: arithmetic, units (₹, %), final answer underlined 1 min
Short on time? End with step 3's one-line conclusion, whatever happens: never leave the figures without it.
Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
- Earlier stay. He lived in India from birth until he left on October 25, 2016 to work abroad; the day of leaving is counted as a day in India. The question gives no other stay in India after that date and before June 2018, so none is assumed; the end of the answer shows that a further stay would not change the result.
- The 200 days all fall in the previous year 2018-19 (from June 01, 2018 to December 17, 2018).
An individual is resident in a previous year if he is in India for 182 days or more in that year (section 6(1)(a)), or for 60 days or more in the year with 365 days or more in the four years before it (section 6(1)(c)). For an Indian citizen who lives outside India and comes on a visit, Explanation 1(b) to section 6(1) replaces the 60 days of section 6(1)(c) by 182 days.
Mr. Rakesh was in India for 200 days in 2018-19. That is 182 days or more, so he is resident under section 6(1)(a) itself, and Explanation 1(b) makes no difference.
A resident individual is not ordinarily resident if either (a) he was a non-resident in nine of the ten previous years before the year, or (b) he was in India for 729 days or less in all during the seven previous years before it (section 6(6)(a)). Otherwise he is ordinarily resident.
| Previous year | Days in India | Status |
|---|---|---|
| 2008-09 to 2015-16 | the whole of each year | Resident |
| 2016-17 (1 April to 25 October 2016) | 208 | Resident (182 days or more) |
| 2017-18 | Nil | Non-resident |
- Test (a): he was resident in nine of the ten years 2008-09 to 2017-18 and non-resident in only one, so he was not a non-resident in nine of the ten.
- Test (b): in the seven years 2011-12 to 2017-18 he was in India for 366 + 365 + 365 + 365 + 366 + 208 + 0 = 2,035 days, far more than 729.
Neither condition for not ordinarily resident is met.
Mr. Rakesh is resident and ordinarily resident in India for the previous year 2018-19 (assessment year 2019-20). He is therefore taxed on his world income, including his salary from ABC Ltd. for the work done in California (section 5(1)).
If the facts are read otherwise
- If 25 October 2016 is not counted as a day in India, his stay in 2016-17 is 207 days: still resident that year, and still resident and ordinarily resident in 2018-19.
- Any further stay in India in 2016-17 or 2017-18 would only add days in India, so it cannot change the result.
Where the 5 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Basic conditions and Explanation 1(b) | 2 |
| 2 | Additional conditions: the ten-year and seven-year tests | 2 |
| 3 | Conclusion and its effect | 1 |
| Total | 5 |
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