1.  PERSON Legal Status Residential Status ResidentNon Resident Legal Status Resident &Ordinarily Resident Resident but not Ordinarily Resident 1.Individual 2.Firm 3.Companies 4.Institution 5.Local authorities 6.H.U.F 7.A.O.P 8.B.O.I

2.  After determining the legal status of an Assessee u/s. 2 (31) the Residential Status of an Assessee is to be determined.   1.Determined of every PREVIOUS YEAR:  Residential Status is determined for every previous year. It depends on the number of days a person is in India during the concerned previous year.   2.Different terms of Citizenship  An Individual may be a Citizen of Britain, but a resident in India. In the same way a Citizen of India may be a non-resident of India.   3.Residential Status is important in deciding whether Foreign Income of a person is Taxable or not.

3. 1.For an INDIVIDUAL Basic 2 conditions An Individual is said to be resident when he satisfies any one of the basic 2 conditions. 1.He must be in India for 182 days or more in that relevant pervious year. OR 2.a.He must be in India for 365 days or more during 4 previous year immediately preceeding the relevant previous year. AND b.He must be in India during that relevant previous year for a period of 60 day or more.

4.  FOLLOWING ARE THE TWO EXCEPTIONS TO RULE OF STAY IN INDIA FOR A PERIOD OF 60 DAYS IN THE SECOND CONDITION ABOVE.  1.If a citizen of India or a member of a crew of an Indian ship leaves India in the previous year for the purpose of employment then he becomes resident if the 60 days are replaced by 182 days. Employment : Self Employment Salaried Employed Professional Non-professional i.e. he becomes resident only if he stays in India for 182 days or more and not 60 days or more. 2.A citizen of India or a person of Indian Origin staying outside India, come on a visit to India in the previous year, then the 60 days must be replaced by 182 days. i.e. he become resident only if he stay’s in India for 182 days and not 60 days. Note: A person is deemed to be of an Indian origin, if he or his parents or any of his grand parents were born in Undivided

5.  An Individual will become a resident in India in the P.Y. 2006- 2007 i.e. for current assessment year 2007-2008 if he satisfies any one of the following 2 basic conditions.  1.He is in India for 182 days or more in the previous year 2006-2007.  OR   2.He is in India for 365 days or more during the period 1.04.2002 to 31.03.2006  AND  He is in India for 60 days or more in the pervious year 2006- 2007.

6.  If an Individual satisfies the test of Resident then further 2 tests are to be made i.e. If an Individual is a Resident in India, he may be either Resident and Ordinarily Resident or Resident but not ordinarily resident.   An Individual may be Resident and Ordinarily Resident if he satisfies following 2 conditions.  1.He has been resident in India for at least 2 out of 10 years immediately preceeding the previous year.  AND  2.He has been present in India for a period of 730 days or more during 7 years immediately preceding the previous year.  If both the above conditions are satisfied then the Individual is Resident and Ordinarily Resident. But if the additional 2 tests are not satisfied by an Individual then he is said to be Resident but not Ordinarily Resident. 