Amendment of section 6.
4. In section 6 of the Income-tax Act, with effect from the 1st day of April, 2021,––
(a) in clause (1), in Explanation 1, in clause (b), for the words “one hundred and eighty-two days", the words “one hundred and twenty days” shall be substituted;
(b) after clause (1), the following clause shall be inserted, namely:––
“(1A) Notwithstanding anything contained in clause (1), an individual, being a citizen of India, shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.”;
(c) for clause (6), the following clause shall be substituted, namely:––
'(6) A person is said to be “not ordinarily resident” in India in any previous year, if such person is-
(a) an individual who has been a non-resident in India in seven out of the ten previous years preceding that year; or
(b) a Hindu undivided family whose manager has been a non-resident in India in seven out of the ten previous years preceding that year.'.
Notes on Clauses:
Clause 4 of the Bill seeks to amend section 6 of the Income-tax Act relating to residence in India.
Clause (1) of said section provides for situations in which an individual shall be resident in India in a previous year. Sub-clause (c) thereof provides that the individual shall be Indian resident in a year, if he having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. Clause (b) of Explanation 1 of said clause provides that in case of an individual being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C of the Income-tax Act, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days" occurring therein, the words "one hundred and eighty two days" had been substituted.
It is proposed to amend said sub-clause (b) of said Explanation 1 so as to substitute the words “one hundred and eighty-two days” with “one hundred and twenty days”.
It is proposed to insert clause (1A) in said section after clause (1) thereof so as to provide that notwithstanding anything contained in that sub-section, an individual, being a citizen of India, shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.
Clause (6) of said section provides for situations in which a person shall be “not ordinarily resident” in India in a previous year. Sub-clause (a) thereof provides that if such person is an individual, he shall be “not ordinarily resident” in India if he has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. Sub-clause (b) thereof contains similar provision in case of manager of the Hindu undivided family.
It is proposed to substitute said clause (6) so as to provide that an individual or an Hindu Undivided Family shall be said to be “not ordinarily resident” in India in a previous year if the individual or the manager of the Hindu Undivided Family, as the case may be, has been a non-resident in India in seven out of ten previous years preceding that year.
These amendments will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.
