The Authority for Advance Ruling (“AAR”) in the case of Shri Anurag Chaudhary has held that a returning individual should stay for 182 days (and not 60 days) or more to qualify as a resident in India.
Facts
- NIIT technologies Limited, an Indian Company posted Anurag Chaudhary (“the applicant”) to work in its group company in the USA, NIIT Technologies Inc. as a software engineer.
- He left India for the purpose of employment on 31 March 2008 (i.e. tax year 2007-081) and came back on 29 November 2008 (tax year 2008-09).
- During the tax year 2008-09, he was in India for 122 days and spent 243 days in USA.
- The applicant sought an advance ruling as to whether the salary income earned in USA in the tax year 2008- 09 is liable to be taxed in India based on his residential status in India.
Residency rules under the Indian tax laws
A person will qualify as resident if he stays in India
- for a period of 182 days or more in a tax year or
- for 60 days or more in a tax year and 365 or more days in the preceding four tax years.
However, an exception has been given to the above rule for Indian citizens leaving India for the purpose of employment whereby 60 days will be replaced by 182 days in the said tax year.
AAR’s Decision
The AAR has summarised the provisions of the Act dealing with residential status stating that if an individual has spent less than 182 days in India during a tax year and was outside India for the purpose of employment, then regardless of his being in India for 365 days or more during 4 preceding tax years, he can be treated as a nonresident in India.
