Residence of Assessee
Table of Contents
In order to calculate the tax liability of the assessee, first need to find the residential status of the assessee. Residence and Citizen are two separate things. In order to compute income tax liability, every taxman first needs compute the residential status of assessee. For audience who are reading this, we will going to understand two important terms:- Assessee & Residence
Assessee
First of all lets make it clear , this definition of assesse is strictly confined to Income Tax act.
According to section 2(7) of Income tax Act, Assessee is the person who is liable to pay any tax or sum of money.
Tax can be of Income tax through its return, advance tax, Tax deducted at source (TDS) or Tax collected at source (TCS).
Sum of money can be the penalty or fine or interest which is payable.
If we further look upon the definition of the income tax, Assessee is also the person who is taken for assessment of:-
- Income
- Losses he has sustained
- Amount of money due for the refund
- Tax liability
Hence, as per above definition of the assessee can be a individual, company, partnership firm, HUF, Trust etc. who’s income or tax liability or sum of money payable or loss sustained is being calculated.
Residence
Lot of people gets confused by the the term citizenship and residence. In this article, we first Understand the meaning of citizen
Citizen of India is person with legal rights and duties in Republic of India, holding citizenship of India through birth, descent, registration or naturalization
Resident is the term used by the Taxman. Residential status must ascertain every year in order to find the Income tax liability of the person. Residence status ascertained differently for the different class of the person:-
• Individual
For the Individuals, Individuals is considered residence of India if following conditions are full-filled.
- He has been in India for 182 days or during previous years.
- He has been in India during 4 years immediately preceding previous year for at least 365 days and has been in India for 60 days during previous year.
• HUF
Huf would be considered as resident of India if its karta is situated wholly or partly in India.
• Companies
Company is considered as the Resident of India if the following conditions are full-filled
- It is Indian Company
- Its place of effective management is in India.
• Firms
A firm would be resident of India if its control and place of management is situated in India.
• Local Authorities and Artificial Judicial Person
It will considered as resident if its control and management of its affairs are located in India.
Scope of this In Total Income
When the taxman calculates the income, then it keeps mind following three considerations:
- The residential status of Assessee.
- The place of accrual or receipt of income, whether you actually received or deemed to be received.
The point of time at which the income had accrued to or was received by or on behalf of assessee.
Conclusion
Before ascertaining the tax liability the person first needs to ascertain the Resident status of Assessee.
Need Help Filing Your ITR?
Even if your income is low, wrong filing can lead to penalties and notices.
Our tax experts at Uniserve Business Solution help individuals, professionals, and businesses file accurate, compliant returns.
Contact us today for ITR filing, tax planning & compliance support. Click Here