Section 6(1)(c) of the Income Tax Act, 1961, deals with the determination of the residential status of an individual for the purpose of taxation. The section is essential as it helps in identifying whether an individual is liable to pay taxes in India or not. In this blog, we will discuss section 6(1)(c) of the Income Tax Act in detail.
What is Section 6(1)(c) of Income Tax Act?
Section 6(1)(c) of the Income Tax Act states that an individual will be considered a resident in India if he/she is present in India for a total of 182 days or more during the relevant financial year. The financial year in India starts from April 1 and ends on March 31 of the following year.
Key features of Section 6(1)(c)
The following are the essential features of section 6(1)(c) of the Income Tax Act:
Presence in India: To be considered a resident in India under section 6(1)(c), an individual must be physically present in India for a total of 182 days or more during the relevant financial year. This period can be continuous or intermittent.
Relevant Financial Year: The financial year is the period between April 1 and March 31 of the following year. The individual’s presence in India during this period will determine his/her residential status for tax purposes.
Consequences of being a resident: If an individual is considered a resident in India under section 6(1)(c), his/her global income will be taxable in India. This means that the individual will have to pay tax on his/her income earned in India as well as income earned outside India.
Exceptions: There are some exceptions to the rule mentioned in section 6(1)(c). For instance, if an individual is a citizen of India or a person of Indian origin (PIO), and he/she leaves India for employment or any other purpose, he/she will be considered a resident in India if he/she is present in India for 182 days or more during the relevant financial year.
Exceptions to Section 6(1)(c)
As mentioned earlier, there are exceptions to the rule of section 6(1)(c) of the Income Tax Act. These exceptions include:
Non-residents: If an individual is not a resident in India under any other provision of section 6, he/she will not be considered a resident under section 6(1)(c).
Indian citizens leaving India: If an individual is an Indian citizen and leaves India for employment or any other purpose, he/she will not be considered a resident under section 6(1)(c) if he/she is present in India for less than 182 days during the relevant financial year.
PIOs leaving India: If an individual is a person of Indian origin (PIO) and leaves India for employment or any other purpose, he/she will not be considered a resident under section 6(1)(c) if he/she is present in India for less than 182 days during the relevant financial year.
Crew members of Indian ships: If an individual is a crew member of an Indian ship, he/she will not be considered a resident under section 6(1)(c) if he/she is present in India for less than 182 days during the relevant financial year.
Consequences of being a resident under Section 6(1)(c)
If an individual is considered a resident in India under section 6(1)(c), his/her global income will be taxable in India. This means that the individual will have to pay tax on his/her income earned in India as well as income earned outside India. The individual will also be eligible for various tax benefits, such as deductions and exemptions, available to residents under the Income Tax Act.
Conclusion
Section 6(1)(c) of the Income Tax Act, 1961, plays a crucial role in determining the residential status of an individual for tax purposes. It is important for individuals to understand the provisions of this section to ensure that they comply with the tax laws of India. The exceptions to the rule of section 6(1)(c) provide relief to certain categories of individuals who may be present in India for less than 182 days during the relevant financial year.
Read more useful content:
- section 234e of income tax act
- section 286 of income tax act
- section 90a of income tax act
- section 40a(7) of income tax act
- section 226(3) of income tax act
- section 24 of income tax act
Frequently Asked Questions (FAQs)
What does Section 6(1)(c) of the Income Tax Act, 1961, state?
Section 6(1)(c) of the Income Tax Act states that an individual will be considered a resident in India if he/she is present in India for a total of 182 days or more during the relevant financial year.
What is the relevance of Section 6(1)(c) in determining the residential status of an individual for tax purposes?
Section 6(1)(c) helps in identifying whether an individual is liable to pay taxes in India or not. If an individual is considered a resident in India under this section, his/her global income will be taxable in India.
What is the financial year in India?
The financial year in India starts from April 1 and ends on March 31 of the following year.
Is physical presence necessary to determine the residential status of an individual under Section 6(1)(c)?
Yes, physical presence is necessary to determine the residential status of an individual under this section.
What are the exceptions to Section 6(1)(c)?
The exceptions to this section include non-residents, Indian citizens leaving India, PIOs leaving India, and crew members of Indian ships.
What is the consequence of being a resident under Section 6(1)(c)?
If an individual is considered a resident under this section, his/her global income will be taxable in India.
Are there any tax benefits available to residents under the Income Tax Act?
Yes, residents are eligible for various tax benefits, such as deductions and exemptions, available under the Income Tax Act.
What is the penalty for not paying taxes on global income in India?
If an individual fails to pay taxes on his/her global income in India, he/she may be liable to pay penalty and interest under the Income Tax Act.
Is it possible to change the residential status during the financial year?
No, the residential status of an individual cannot be changed during the financial year. It can only be determined at the end of the financial year based on the physical presence of the individual in India.
What is the importance of understanding Section 6(1)(c) of the Income Tax Act?
Understanding Section 6(1)(c) is important for individuals to ensure that they comply with the tax laws of India and avoid any penalties or legal consequences. It also helps individuals to plan their taxes and take advantage of the tax benefits available to them.
