Section 6 of ITA, 1961 : Section 6: Residence In India

Explanation using Example

Let's consider an example to understand the application of Section 6 of The Income-tax Act, 1961:

Raj, a citizen of India, works for an IT company and was sent to the USA for a project on January 1, 2022. He returned to India on December 31, 2022. During 2022, he was in India for 30 days. In the previous four years, he was in India for a total of 400 days.

According to Section 6:

1. Raj is considered a resident of India for the financial year 2022-2023 because:
   1. He was in India for more than 182 days in the preceding four years.
   2. He was in India for 30 days in 2022, which is less than 60 days, but since he was in India for more than 365 days in the four years preceding 2022, he meets the criteria under sub-clause (b).
2. If Raj had left India for employment, then the 60-day criterion in sub-clause (b) would have been substituted with 182 days, making it easier for him to be considered a non-resident, but since he was in India for 400 days in the preceding four years, he would still be a resident.
3. If Raj were part of the crew of an Indian ship or visiting India and met the conditions in Explanation 1, the 182-day substitution would also apply.

This classification is important for tax purposes, as residents and non-residents are taxed differently under the Income-tax Act.