Non Resident under Income Tax Act

Non-resident - definition:

There has been confusion and consequent litigation regarding the status of 'Not Ordinarily Resident'. This has now been clarified to mean the following:

  • A person, who has been non-resident in India in 9 out of the 10 preceding previous years.
  • a person, who has been in India for less than 730 days in the 7 years, preceding the year in question.

In the past, if a person was non-resident for 2 years, he could stay in India for as many as 9 years and be treated as 'Resident' but 'Not Ordinarily Resident' for those 9 years. Now, this has been reversed. Only a person, who has been non-resident for 9 years, will be entitled to the facility of 'Resident'. He will be granted the status of Not 'Ordinarily Resident' only after 2 years.

Similarly, a resident Hindu Undivided Family is treated as 'not ordinarily resident' in India, if the manager of the family satisfies either of the above two conditions. To further clarify the issue, a resident individual will be 'ordinarily resident' in India if he satisfies the following two additional conditions:

As on March 31, 2003- i.e. for the assessment year 2003-04:

  • He has been resident in India for at least 9 out of the 10 previous years, immediately preceding the relevant previous years.
  • He has been in India for a period of 730 days or more during the 7 years, immediately preceding the relevant previous year.

From April 01, 2003- i.e. for the assessment year 2004-05 onwards:

  • He has been resident in India for at least 2 out of the 10 previous years, immediately preceding the relevant previous year.
  • He has been in India for a period of 730 days or more during the 7 years, immediately preceding the relevant previous year
 

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