Income Tax, Residential Status: Rules (Sec.6)

Two cousins earn the same amount in a year. One lives in Vashi and freelances for a client in Dubai. The other lives in Dubai and freelances for a client in Vashi. Does India tax both of them, one of them, or neither? The answer does not depend on passports or on where the money lands first. It depends on a label the Income-tax Act sticks on each person every year: their residential status.

In two minutes

Residential status is decided afresh for every previous year by counting how long a person stayed in India, and that label (resident and ordinarily resident, resident but not ordinarily resident, or non-resident) decides how much of the person’s global income India may tax.

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