Residential status

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Asawari Malhotra (Querist)
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24 February 2013 What is the purpose determining whether a resident individual is ordinarily resident or not ? And why is this applicable only to individuals and HUFs and not to firms and aop and companies ? Pls explain in detail and pls avoid using the technical terms.. I'm new to this subject.. Thanks anyway..

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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24 February 2013 The purpose of determining residential status is not to harass the new students to this subject. It is having a more important objective to tax the income which is being earned in India.
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Example- Mr. John is an American Professor.
His Income there in US is $200000/-
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He visits India and delivers lectures in India. He gets 500000/- during his 15 days tour.
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Income Tax is levied in both US and India.
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Mr. John's Income of Rs. 500000/- only is taxable in India. This is due to the fact that he is non resident. However , due to the same fact- on his US income tax can not be levied by the Indian Govt.
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This is just an example to start thinking from multiple angles, the importance will automatically be understood.
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For Firm,s AOP, Company and all other persons, there are certain prescribed criteria -for deciding the residential status.

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