We all are aware of the fact that tax is charged on total income and the Individual income is taxed based on his residential status . Ultimately, Incidence of tax on the income depends upon the residential status . So, now, let us truly describe the Primary & secondary condition for determination of residential status of an Individual.There are normally two primary classifications – Resident & Non- Resident.

Again, Resident is divided into two sub-categories (secondary classification) – Ordinarily & Not-ordinarily Resident.

PRIMARY CONDITION:

An Individual is said to be Resident in India, if he satisfies at least one of the basic condition:

1. He is in India for at least 182 days in the previous year (PY).
2. He is in India for at least 60 days in PY & for 365 days or more during 4 years immediately preceding PY.

NOTE:  Both days i.e. the day when one left & the day on which he came to India is considered for Number of days of stay in India.

Exceptions:

Condition 2 is not applicable when Indian citizen during PY

• Leaves India for employment outside India.
• Leaves India as he is a crew member of an Indian ship.
• Comes to visit India.

SECONDARY CONDITION:

When it is determined that a person is resident then the further process to determine whether he is an ordinarily or non-ordinarily resident takes place.

An individual is said to be not-ordinarily resident if he satisfies any one of the following conditions:

He is a resident in India:

1. For at least 2 years out of 10 previous years preceding the relevant PY.
2. For at least 730 days during 7 years immediately preceding the relevant PY.

Let’s understand it with an Example:

Mr. X is an Indian citizen went to Canada for employment. He leaves India for first time on Sep 26, 2010. During the PY 2011-12 he comes to India for 175 days. Now, we have to determine his residential status for AY 2011-12 & AY 2012-13.

Determination:

An Individual is said to be resident in India as per primary conditions mentioned above:

In the given example, since Mr. X is an Indian citizen, leaving India for employment, therefore condition 2 is not operative. But condition 1 will get satisfied if he stays in India for at least 182 days in PY.

Number of days of stay of Mr. in India in the PY 2010-11.

MONTH	NO. OF DAYS
APRIL	30
MAY	31
JUNE	30
JULY	31
AUGUST	31
SEPTEMBER	26
TOTAL	179

Since Mr. X stays for less than 182 days (179 days) in India, so he is a Non-Resident in AY 2011-12. Also, in AY 2012-13, he stays for 175 days in India which is less than 182 days, so he is a non-resident for AY 2012-13 also.