Residential status

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This query is : Resolved

Asawari Malhotra (Querist)

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)

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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