Direct Taxes Code keeps residence criteria for NRIs unchanged

The residential status of a person, decided under the Income Tax Act, 1961 and under the Foreign Exchange Regulation Act, 1973, remain unchanged under the Direct Taxes Code unveiled by finance minister Pranab Mukherjee on Wednesday.

Under the Income Tax Act, the residential status of a person is determined on the basis of number of days he stays in India whereas under FERA, it is the intention of a person to be in India or outside India that would be the main factor in determining his residential status.

As per the Direct Taxes Code, an individual shall be resident in India in any financial year, if he is in India-
(a) For a period, or periods, amounting in all to 182 days, or more, in that year; or

(b) For a period, or periods, amounting in all to (i) 60 days, or more, in that year, and

(ii) 365 days, or more, within the four years immediately preceding that year.

The provisions of clause (b) of sub-section (1) shall not apply in respect of an individual who is:

(a) a citizen of India, or a person of Indian origin, living outside India and who visits India in that year; (b) a citizen of India and who leaves India in that year as a member of the crew of an Indian ship; or (c) a citizen of India and who leaves India in that year for the purposes of employment outside India.

A company shall be resident in India in any financial year, if: (a) It is an Indian company; or (b) its place of control and management, at any time in the year, is situated wholly, or partly, in India.

However, every other person shall be resident in India in any financial year, if the place of control and management of its affairs, at any time in the year, is situated wholly, or partly, in India.