RESIDENTIAL STATUS AND TAX LIABILITY

RESIDENTIAL STATUS :-

Residential status of a every person is to be decided every year, as per IT rules to find out which income of a person will be taxable in India.
Residence - To live or stay in India.
Citizenship-  By birth.

Residential status of an Individual:-

To check the residential status of an individual, there are two basic condition- A1 and A2.
If an individual satisfied only one of the two basic conditions then he/she is resident. If no one is satisfied then he/she will be non- resident.

RESIDENT:-

• Ordinary resident (OR):- A1 or A2 + B1 and B2
• Non ordinary resident (NOR):- A1 or A2 + B1 or B2 or B0 

NON RESIDENT:-

• NRI:- A0

To check either he/she is OR or NOR.
There are further/additional two conditions B1 AND B2.

Lets check the status, resident or non resident:-

• A1:- He/She should be in India for atleast 182 days in the relevant previous year.

For example:- Assessment year(A.Y.) is 2018-19
                   Relevant previous year(R.P.Y) is 2017-18
Assessment year is in which the tax payer is paying tax of the previous year.

• A2:- He/She should be in India for atleast 60 days in the relevant previous year and(+) 365days in 4 previous year just before the relevant previous year. 

For example:- A.Y. is 2018-19
                          R.P.Y is 2017-18 = 60 days +
            2016-17+2015-16+2014-15+2013-14 =365 days total 4 yrs(previous yr. just before R.P.Y)

Exception when A2 not applied:-

1. Crewman (Shipman)
2. Indian citizen goes to abroad for employment purpose. (A2 applied in visit, study, business etc.)
3. Indian origin foreign comes to India
4. Indian origin:- forefather born in undivided India.

• B1:- He/She should be resident (A1 or A2) in India for atleast 2 times in 10 year before the relevant previous year.

For example:- In any 2 years of the 10 years before the relevant previous year the individual should fullfill the condition fron A1 or A2.

• B2:- He/She has been in India for atleast 730 days in 7 years just before the relevant previous year.