RESIDENTIAL STATUS OTHER THAN INDIVIDUALS
RESIDENTIAL STATUS OTHER THAN INDIVIDUALS
RESIDENTIAL STATUS- OTHER THAN INDIVIDUALS A.Y (2025-26)
- What are the types of assesse other than Individuals?
The following are the types of assesse other than Individuals: -
- Hindu Undivided Family (HUF).
- Partnership Firm.
- Company.
- Association of Persons (AOP) or Body of Individuals (BOI).
- Local Authority.
- Artificial Juridicial Body (not covered under any of the above – mentioned categories).
- Residential status in case of HUF?
The Residential Status of an HUF depends upon two factors, the location of control and management of it affairs and the residential status of its Karta.
|
STATUS |
DESCRIPTION |
|
HUF is said to be ordinarily resident in India in any Previous year.
The expression “control and management” signifies controlling and directive power. In other words, it means “head and brain”. Moreover, the control and management should be de facto and not merely the right or power to control and manage.
The Karta has been resident in India in 2 out of 10 previous years, and
Its Karta has, during the 7 years preceding that year, been in India for a period amounting in all to 730 days or more. |
|
A Hindu undivided family is said to be “not ordinarily resident in India”, if control and management of its affairs is situated wholly or partly in India during the previous year, but its Karta does not satisfy the additional conditions of Section 6(6)(a). |
|
A Hindu undivided family is said to be a non-resident in such cases only where its control and management are situated wholly outside India during the previous Year. |
NOTE:
For the purpose of calculating the period of Karta’s stay in India, we shall add up the stay in India of all successive Karta’s of the Family, in case of death of First Karta.
Example:
Head office of Arun & HUF, a Hindu undivided family is situated in Australia is managed by Mr. Arun, who is a resident in India only 2 years out of 10 years during the previous year 2024-25. Determine the residential status of HUF for A.Y 2025-26, if the affairs of the family business are (i) wholly controlled from Australia (ii) partly controlled from India.?
In the first case since the affairs of the HUF are controlled and managed wholly outside India, HUF will be considered as Non-Resident in A.Y 2025-26.
In the second case, the affairs of the HUF are controlled partly from India. Therefore, HUF is a resident in India in the A.Y 2025-26. However, since Mr. Arun does not satisfy both the above-mentioned conditions. The HUF will be considered as Resident but not Ordinarily Resident.
- Resident status in case of Firms and other Association of Persons?
Firms and other Association of Persons can fall under two categories only. They may either be residents or non-residents. The category of non-ordinarily residents does not apply to such assessee.
|
STATUS |
DESCRIPTION |
|
According to section 6(2), a firm or other association of persons is said to be resident in India in any previous year where during that year the control and management of its affairs is partly or wholly situated in India. The residential status of its partners/ members is immaterial. |
|
A firm or association of persons is said to be Non-resident when the control and management of its affairs is situated wholly outside India during the previous year. |
Example:
A firm has five partners who are permanent resident in India. The firm owns a rubber estate in Malaysia. The estate is managed and controlled by the partners in India, through an agent in Malaysia. Determine the residential status of the firm.
Even if the control and management of the firm is partly situated in India, the firm becomes resident. Here, all the partners reside in India and manage at least a part of affairs of the estate. As such, the firm is resident in India.
- Resident status of a Company?
Resident status of a company is explained below:
|
STATUS |
DESCRIPTION |
|
A company is said to be resident in India in previous year if: -
|
|
A company is said to be non-resident in India in any previous year if: -
|
“Place of effective management” means a place where key management and commercial decision that are necessary for the conduct of the business of an entity are in substance made.
Example:
International Remedies is a registered company in Germany, and has a registered office in Germany, but the management and control are situated wholly in India. What will be the residential status of the company for tax purposes?
As the company’s control and management is situated wholly in India, it will be resident in India and the location of registered office of the company is immaterial.
If in the above question if the control and management is partially situated in India, the company is non-resident in India for tax purposes.
The Indian chemicals limited is a registered Indian Company carrying business in India and in gulf countries. The control and management of affairs was partially situated in Riyadh during the year ending March 2025. What will be the resident status of the company for A.Y 2025-26?
The Indian chemical limited is an Indian company, therefore it will be treated as a resident in India irrespective of the fact that its POEM is partially outside India.
