Citizen of India will be Deemed Resident if stays in India for 120 to 181 days and have Income > 15 Lakhs & don’t pay tax in any other country from 1 April 2020

Some Indian citizens shift their stay in low or no tax jurisdiction to avoid payment of tax in India. The Budget 2020 has made changes in the income tax act section 6 which determines residential status of the Individual and based on that they are taxed in India, there are few conditions attach to it

The Finance Act, 2020 has insert a new clause (1A) to section 6 of the Income-tax Act to provide that an Individual, being a citizen of India , having total income of Rs 15 Lakhs during previous year (other than foreign income) shall be deemed to be resident in India in that previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature

For this provision, income from foreign sources means income which accrues or arises outside India (except income derived from a business
controlled in or a profession set up in India)

From Financial Year 2020 -21, Assessment Year 2021-22 an Indian Citizen earning total income in excess of Rs. 15 lakhs (other than from foreign sources) shall be deemed to be resident in India if he is not liable to pay tax in any country. The residential status of such person shall of a ‘Not Ordinarily Resident’ due to new sub-clause (d) added to Section 6(6).

The assessee whos existing income is not more than 15 Lakhs in previous year in India won’t be covered by the above provision

Individual / ConditionsIndian Citizen gone outside India as Crew or EmploymentIndian Citizen gone outside India as Crew or EmploymentIndian Citizen gone outside India as Crew or EmploymentIndian Citizen Visiting IndiaIndian Citizen Visiting IndiaIndian Citizen Visiting India
Total Income (in India – Exclude Foreign Income)Exceeds Rs 15 LakhsExceeds Rs 15 LakhsNot Exceeds 15 LakhsExceeds Rs 15 LakhsExceeds Rs 15 LakhsNot Exceeds 15 Lakhs
Liable to Pay Tax in Other CountryNoYesYes or NoNoYesYes or No
Period of Stay in IndiaMore than 120 Days and Less than 182 DaysMore than 120 Days and Less than 182 DaysLess than 182 DaysMore than 120 Days and Less than 182 DaysMore than 120 Days and Less than 182 DaysLess than 182 Days
Resident Status if Stay is less than above mention daysNon Ordinarily ResidentNon ResidentNon ResidentNon Ordinarily ResidentNon ResidentNon Resident

The residential status of such person shall be ‘Not Ordinarily Resident’ and his global income won’t be taxable in India, only all income earned outside India in which income derived from a business controlled in or a profession set up in India will be taxable in India. This is a big relief for Citizen of India who travel abroad frequently as global income wont be taxable except otherwise as mention above.

Deemed Residential Status is concept linked with citizen of India, its applicable only for citizen of India and not to others.

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