Section 6: residence in India

Introduction

Section 6 determines residence separately for an individual, HUF, firm, company and other persons. For individuals, physical presence, citizenship, Indian income and prior-year history can produce resident, non-resident or resident-but-not-ordinarily-resident status.

Key takeaways

Basic tests for individuals

Under Section 6(2), an individual is resident in India in a tax year if he/she is in India for 182 days or more in that tax year, or is in India for 60 days or more in that tax year and has been in India for 365 days or more cumulatively in the four tax years immediately preceding it.

Section 6(3) relaxes the 60-day limb for a citizen of India who leaves India in the tax year as a crew member of an Indian ship or for employment outside India.

Section 6(4) and 6(5) relax the 60-day limb (extending it to 120 days) for a citizen of India or person of Indian origin who is outside India and visits India, if their total income other than foreign-source income exceeds fifteen lakh rupees during the tax year.

Deemed residency for high-income citizens not taxed anywhere

Section 6(7) deems an individual to be resident in India for a tax year if he/she (a) is a citizen of India, (b) is not liable to tax in any other country or territory by reason of domicile, residence or similar criteria, and (c) has total income (other than foreign-source income) exceeding fifteen lakh rupees during that tax year. This deeming rule does not apply if the person is already resident under the ordinary tests in sections 6(2) to 6(6) (section 6(8)).

HUFs, firms, companies and other persons

A Hindu undivided family, firm or other association of persons is resident in India in a tax year unless the control and management of its affairs is situated wholly outside India during that year (section 6(9)).

A company is resident in India if it is an Indian company, or if its "place of effective management" is in India in that tax year - meaning the place where key management and commercial decisions necessary for the conduct of the business as a whole are, in substance, made (section 6(10)).

Every other person is resident in India unless the control and management of its affairs is situated wholly outside India during the tax year (section 6(11)).

Section 6(12) provides that if a person is resident in India for a tax year for any one source of income, that person is treated as resident in India for that tax year for all other sources of income too.

"Not ordinarily resident"

Section 6(13) sets out when a resident individual (or HUF, by reference to its manager) is treated as "not ordinarily resident" rather than fully resident. This status matters because, under section 5(1), a person who is not ordinarily resident is taxed on foreign income only if it is derived from a business controlled in, or a profession set up in, India.

"Income from foreign sources" - the defined term

Section 6(14) defines "income from foreign sources" as income which accrues or arises outside India (other than income from a business controlled in, or profession set up in, India) and which is not deemed to accrue or arise in India. This is the term used in the ₹15,00,000 thresholds and in the not-ordinarily-resident foreign-income rule under section 5.

Step-by-step flow for determining residence of an individual under Section 6

1. 1

   Was the individual in India for 182 days or more in the tax year?

   • Yes: Resident under Section 6(2)(a); go to the not-ordinarily-resident check in Section 6(13).
   • No: Go to the next step.
2. 2

   Was the individual in India for 60 days or more in the year and 365 days or more in the four preceding years?

   If the individual is an Indian citizen leaving India as Indian-ship crew or for employment outside India, this test does not apply (Section 6(3)). For a citizen or person of Indian origin visiting India, it does not apply unless total income other than income from foreign sources exceeds ₹15 lakh, in which case 60 days is read as 120 days (Sections 6(4) and 6(5)).

   • Test met: Resident under Section 6(2)(b); go to the last step.
   • Not met: Go to the deemed-residence check.
3. 3

   Is the individual a citizen of India, not liable to tax in any other country by reason of domicile, residence or similar criteria, with total income (other than from foreign sources) exceeding ₹15 lakh?

   Section 6(7) deems such a person resident; it applies only if he is not already resident under Sections 6(2) to 6(6).

   • Yes: Deemed resident; Section 6(13)(c) treats him as not ordinarily resident.
   • No: Non-resident for the tax year.
4. 4

   If resident, is he not ordinarily resident?

   Check Section 6(13): non-resident in 9 of the 10 preceding tax years, or 729 days or less in India in the 7 preceding tax years, or the case of a citizen or person of Indian origin with income (excluding foreign sources) above ₹15 lakh who was in India for 120 days or more but less than 182 days.

Practical checklist

Glossary

Resident but not ordinarily resident

A resident individual's narrower status determined by the section's additional conditions.

Place of effective management

The management-and-commercial-decision test relevant to company residence.

Frequently asked questions