Understanding Residential Status for Tax Purposes Under Section 6 of Income Tax Act, 1961: Key Criteria and Implications

Tax is levied on an individual's total income based on their residential status under the Income Tax Act, 1961. Section 6 categorizes individuals as Resident, Resident but Not Ordinarily Resident, or Non-Resident. Residential status is determined by physical presence in India, not citizenship. An Indian citizen can be a non-resident for tax purposes, while a foreign national can be a resident. This status can change annually, and it is crucial during the previous year, not the assessment year. Individuals must provide all relevant facts to the Assessing Officer to establish their correct residential status.

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