Persons Liable to Pay Income Tax

• Individuals (including non-residents), Hindu Undivided Families, Associations of Persons/Bodies of Individuals (where the individual shares of the members are known) and artificial juridical persons (such as deities of temples) having taxable income exceeding Rs.50,000.
• Societies and charitable/religious trusts having taxable income exceeding
  Rs.50,000.
• All partnership firms irrespective of their income.
• Co-operative societies irrespective of income.
• Companies irrespective of income.
• Local authorities irrespective of income.
• AOP/BOI where shares of the members are indeterminate or unknown irrespective of income.

Residential Status

      The residential status of an assessee decides the extent of his taxable income.  It is determined solely on the basis of physical presence and/or other prescribed criterion as against nationality or domicile of the individual.  It is determined for every previous year separately.  A person may be a resident in one previous year and non-resident in next year.  The prescribed tests for determining  the  residential status are given in following paras :

1.  Residents in India:

     (a) Individual is ‘Resident’ if any of the following conditions is satisfied:

            (i) Stays in India for 182 days or more during the previous year; or     [Sec.6(1)(a)]

            (ii) Stayed in India for 365 days or more during the four preceding years and  stays in India for at least 60 days during the previous year (182 days in case of an Indian citizen or a person of Indian origin coming on a visit to India or in case of an Indian citizen going abroad as a member of the crew of an Indian ship or for employment ).   [Sec.6(1)(c)]

            Note: Stay in India may be continuous or intermittent.

     (b) Hindu Undivided Family or Firm or other Association of Persons is Resident of India in any previous year except where the control and management of its affairs is wholly situated outside India in that previous year.  [Sec. 6(2)]

     (c) Company is resident of India if:

            (i)  it is an Indian company, or

            (ii) during the previous year its control and management is wholly in  India.  [Sec. 6(3)]

     (d) Every other person is treated as resident in India in any previous year except in the case where the control and management of its affairs is situated wholly outside India.

               Note: A Person resident in India, in a previous year in respect of any source of income shall be deemed to be resident in India in respect of his other sources of income as well.

2.  Non-Residents

       A person is non-resident if he is not resident in India.   [Sec. 2(30)]

3. Not Ordinary Resident

       An individual who, or an HUF whose manager, has not been resident in India in nine out of the ten previous years preceding the relevant previous year, or has not been in India for an aggregate period of 730 days or more during the seven previous years preceding that year, would be regarded as person not ordinarily resident in India.     [Sec. 6(6)]