Taxation - DT Ch 02: Residential Status - Test 1: answer key

Question 1 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. Mr. Aditya Vardhan, an Indian citizen aged 42, has been residing in Pune. He left India on 12 November 2026 to join a Dubai-based engineering company; this was his first departure for employment outside India. From 1 April 2026 to 12 November 2026, both dates included, he remained in India. He did not visit India after 12 November 2026. For the ten tax years preceding FY 2026-27, he was non-resident in eight years and resident in two years. His cumulative stay in India during the seven tax years preceding FY 2026-27 was 700 days. His cumulative stay in the four tax years preceding FY 2026-27 was 420 days. During FY 2026-27, his salary from the Dubai employer was credited to a UAE bank account; he also received ₹9,50,000 as rent from a house property in Pune and ₹1,20,000 interest from an Indian bank. He has no income from foreign sources other than the Dubai salary. He wants to know his position for FY 2026-27. In a separate query, assume his cumulative stay in the seven preceding tax years was 735 days and he was resident in three of the ten preceding tax years, while the other particulars remain unchanged.

Based on the facts of Case Scenario-I, what is the number of days Mr. Aditya Vardhan stayed in India during FY 2026-27?

1. 225 days
2. 226 days (correct answer)
3. 227 days
4. 228 days

Answer: B — 226 days

Explanation. Both the arrival date and the departure date are counted as days in India. Mr. Aditya stayed from 1 April 2026 to 12 November 2026, both dates included. The day count is 30 days in April, 31 in May, 30 in June, 31 in July, 31 in August, 30 in September, 31 in October and 12 in November. The total is 30 + 31 + 30 + 31 + 31 + 30 + 31 + 12 = 226 days. Therefore, he stayed in India for 226 days during FY 2026-27.

Where it goes wrong. Students often exclude the departure date or count only completed months, which gives 225 or 227 days.

Authority. Section 6(1) of the Income-tax Act, 1961

Question 2 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

What is the residential status of Mr. Aditya Vardhan for FY 2026-27 based on the original facts in Case Scenario-I?

1. Non-resident, since he left India before completing 365 days in the four preceding tax years
2. Resident and ordinarily resident, since he satisfied the first basic condition and stayed 700 days in the preceding seven tax years
3. Resident but not ordinarily resident, since he satisfied the first basic condition and his seven-year stay was 700 days (correct answer)
4. Resident but not ordinarily resident, since he was non-resident in eight out of the ten preceding tax years

Answer: C — Resident but not ordinarily resident, since he satisfied the first basic condition and his seven-year stay was 700 days

Explanation. Mr. Aditya stayed for 226 days, which is 182 days or more, so he satisfies the first basic condition under section 6(1) and is resident. For RNOR under section 6(6), he was non-resident in eight out of ten preceding years, so the 9-out-of-10 test is not met. However, his cumulative stay in the seven preceding tax years was 700 days, which is not more than 729 days. Hence, he is resident but not ordinarily resident. The 700-day fact is the operative additional condition.

Where it goes wrong. The 8-out-of-10 fact is not enough for RNOR; the 729-day threshold in seven preceding years must be checked.

Authority. Section 6(1) of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 3 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

If Mr. Aditya Vardhan’s cumulative stay in the seven tax years preceding FY 2026-27 was 735 days and he was resident in three of the ten preceding tax years, while all other original facts remain the same, what would be his residential status for FY 2026-27?

1. Resident and ordinarily resident, since both additional conditions under section 6(6) are satisfied (correct answer)
2. Resident but not ordinarily resident, since he was non-resident in seven out of ten preceding tax years
3. Resident but not ordinarily resident, since he left India for employment outside India
4. Non-resident, since the 735-day stay relates only to the seven preceding tax years and not the current year

Answer: A — Resident and ordinarily resident, since both additional conditions under section 6(6) are satisfied

Explanation. He remains resident because he stayed 226 days in FY 2026-27, satisfying the first basic condition. For ordinary residence, he must not fall in any RNOR clause. He was resident in three of ten preceding years, so he was not non-resident in nine out of ten years. His seven-year cumulative stay was 735 days, which exceeds 729 days. Both additional conditions for ROR are satisfied. Therefore, he becomes resident and ordinarily resident for FY 2026-27.

Where it goes wrong. Students may treat any employment-related departure as automatically RNOR; the departure exception affects basic conditions, not the ROR test.

Authority. Section 6(1) of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 4 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

In determining Mr. Aditya Vardhan’s residential status for FY 2026-27, which statement correctly describes the effect of his leaving India for employment outside India?

1. Both basic conditions are applied without any change, but the 182-day condition is reduced to 120 days
2. The first basic condition is not applicable, and only the 60-day plus 365-day condition is considered
3. Neither basic condition applies, and he becomes non-resident if he is outside India on 31 March 2027
4. Only the first basic condition of 182 days applies; the 60-day condition is inapplicable to him (correct answer)

Answer: D — Only the first basic condition of 182 days applies; the 60-day condition is inapplicable to him

Explanation. For an Indian citizen who leaves India during the previous year for the purpose of employment outside India, the second basic condition of 60 days in the current year plus 365 days in the four preceding years is not applied. He can become resident only if he stays in India for 182 days or more during FY 2026-27. Since Mr. Aditya stayed 226 days, he is resident on the first basic condition. The exception does not convert the 182-day threshold into 120 days.

Where it goes wrong. The 120-day threshold applies to a different exception for visiting Indian citizens or persons of Indian origin with income above ₹15 lakh, not to employment departure.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 5 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. Mr. Rohan Nair, an Indian citizen, is a member of the crew of an Indian ship engaged in carriage of passengers in international traffic. He joined the ship at Mumbai port on 7 June 2026 and signed off at Mumbai on 20 December 2026. The voyage originated from Mumbai and had its destination at a port outside India. Apart from this voyage, he was in India for 60 days during FY 2026-27. His stay in India in the four tax years preceding FY 2026-27 was 500 days, and in the seven preceding tax years it was 800 days. He was resident in three out of the ten preceding tax years. Ms. Leela Menon, a person of Indian origin, visited India on 1 August 2026 and stayed for 125 days during FY 2026-27. Her total income other than income from foreign sources was ₹18,00,000. She had stayed in India for 380 days in the four tax years preceding FY 2026-27. She also has rental income from a property outside India of ₹5,00,000. In a separate computation, assume Ms. Leela Menon’s total income other than income from foreign sources was ₹14,00,000, while her stay and other particulars remain the same.

In Case Scenario-II, how many days are excluded from Mr. Rohan Nair’s period of stay in India for the eligible voyage from 7 June 2026 to 20 December 2026, both dates included?

1. 196 days
2. 197 days (correct answer)
3. 198 days
4. 199 days

Answer: B — 197 days

Explanation. For an Indian citizen who is a crew member of an eligible foreign-bound voyage, the period from the date of joining the ship to the date of signing off is excluded. The exclusion is from 7 June 2026 to 20 December 2026, both dates included. June contributes 24 days (7 to 30), July 31, August 31, September 30, October 31, November 30 and December 20. The total is 24 + 31 + 31 + 30 + 31 + 30 + 20 = 197 days.

Where it goes wrong. Students may exclude 6 June or 21 December, or count June as 23 days, leading to 196 or 198 days.

Authority. Section 6(1) of the Income-tax Act, 1961; Rule 8 of the Income-tax Rules, 1962

Question 6 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

What is Mr. Rohan Nair’s residential status for FY 2026-27, considering his crew member status and the other particulars in Case Scenario-II?

1. Resident and ordinarily resident, since his actual presence in India outside the voyage was 60 days
2. Resident but not ordinarily resident, since he was resident in three out of the ten preceding tax years
3. Non-resident, since his stay in India excluding the eligible voyage is less than 182 days (correct answer)
4. Resident but not ordinarily resident, since his seven-year cumulative stay was more than 729 days

Answer: C — Non-resident, since his stay in India excluding the eligible voyage is less than 182 days

Explanation. Mr. Rohan is an Indian citizen and a crew member of an eligible voyage. The period from 7 June 2026 to 20 December 2026 is excluded, and outside that voyage he was in India for 60 days. For such a crew member, the second basic condition of 60 days plus 365 days is not applied. He can be resident only if he stays 182 days or more, excluding the eligible voyage. Since the countable stay is 60 days, he is non-resident for FY 2026-27.

Where it goes wrong. The 60 days in India may tempt students to apply the second basic condition, but that condition is inapplicable to an Indian citizen crew member of an eligible voyage.

Authority. Section 6(1) of the Income-tax Act, 1961; Rule 8 of the Income-tax Rules, 1962

Question 7 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

What is Ms. Leela Menon’s residential status for FY 2026-27 based on the original facts in Case Scenario-II?

1. Resident but not ordinarily resident, since she stayed 125 days and her income other than foreign sources exceeded ₹15 lakh (correct answer)
2. Non-resident, since she stayed less than 182 days and the 120-day condition cannot apply to a person of Indian origin
3. Resident and ordinarily resident, since she stayed 380 days in the four preceding tax years
4. Non-resident, since her foreign rental income of ₹5,00,000 is excluded while applying the 120-day condition

Answer: A — Resident but not ordinarily resident, since she stayed 125 days and her income other than foreign sources exceeded ₹15 lakh

Explanation. Ms. Leela is a person of Indian origin visiting India. Her total income other than income from foreign sources is ₹18,00,000, which exceeds ₹15,00,000. She stayed 125 days in FY 2026-27 and 380 days in the four preceding tax years. The modified condition of 120 days plus 365 days is satisfied, so she is resident. Since she stayed less than 182 days and the 120-day route applies, she is RNOR under section 6(6). Foreign rental income is excluded only for the ₹15 lakh threshold, not from total income.

Where it goes wrong. Students may compare 125 days only with 182 days and ignore the 120-day route available when income other than foreign sources exceeds ₹15 lakh.

Authority. Section 6(1) proviso of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 8 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

If Ms. Leela Menon’s total income other than income from foreign sources was ₹14,00,000 instead of ₹18,00,000, while her stay and other particulars remain the same, what would be her residential status for FY 2026-27?

1. Resident and ordinarily resident, since she stayed 380 days in the four preceding tax years
2. Resident but not ordinarily resident, since her stay of 125 days is more than 120 days
3. Resident but not ordinarily resident, since she is a person of Indian origin visiting India
4. Non-resident, since her stay is less than 182 days and the 120-day route is not available (correct answer)

Answer: D — Non-resident, since her stay is less than 182 days and the 120-day route is not available

Explanation. For a visiting person of Indian origin, the second basic condition is not applied if total income other than income from foreign sources does not exceed ₹15,00,000. Here it is ₹14,00,000, so only the 182-day condition applies. Her stay is 125 days, which is less than 182 days. The 120-day plus 365-day route applies only where such income exceeds ₹15,00,000. Therefore, she is non-resident for FY 2026-27.

Where it goes wrong. The 120-day condition is not available when income other than foreign sources is ₹15 lakh or less; equality with ₹15 lakh also does not attract the 120-day route.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 9 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Nandini Rao, an Indian citizen, left India on 30 September 2026 for employment in Canada. She stayed in India from 1 April 2026 to 30 September 2026, both dates included. Her stay in the four preceding tax years was 200 days. She was non-resident in eight out of the ten preceding tax years, and her cumulative stay in the seven preceding tax years was 500 days. What is her residential status for FY 2026-27?

1. Non-resident, because she left India for employment before 31 March 2027
2. Resident but not ordinarily resident, because she satisfies the 182-day condition and the 729-day test (correct answer)
3. Resident and ordinarily resident, because she was resident in two of the ten preceding tax years
4. Non-resident, because the 60-day plus 365-day condition is not satisfied

Answer: B — Resident but not ordinarily resident, because she satisfies the 182-day condition and the 729-day test

Explanation. Ms. Nandini stayed from 1 April to 30 September 2026, both dates included. The count is 30 + 31 + 30 + 31 + 31 + 30 = 183 days. Since she is an Indian citizen leaving for employment, only the 182-day condition is applied, and she satisfies it. She is resident. For RNOR, she was non-resident in eight out of ten years, so the 9-out-of-10 test is not met; however, her seven-year stay of 500 days is within 729 days. Hence, she is RNOR.

Where it goes wrong. Students may apply the 60-day plus 365-day condition or assume employment abroad always makes an Indian citizen non-resident.

Authority. Section 6(1) of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 10 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Kabir Sethi, an Indian citizen, left India on 2 October 2026 for employment in the United Kingdom. He was in India from 1 April 2026 to 2 October 2026, both dates included. He was resident in two out of the ten preceding tax years. His cumulative stay in the seven preceding tax years was 731 days. What is his residential status for FY 2026-27?

1. Resident and ordinarily resident, because he satisfies the 182-day condition and both ROR tests (correct answer)
2. Resident but not ordinarily resident, because he was non-resident in eight preceding tax years
3. Non-resident, because he left India for employment before completing 365 days in India
4. Resident but not ordinarily resident, because his seven-year stay was only 731 days

Answer: A — Resident and ordinarily resident, because he satisfies the 182-day condition and both ROR tests

Explanation. Mr. Kabir stayed from 1 April to 2 October 2026, both dates included: 30 + 31 + 30 + 31 + 31 + 30 + 2 = 185 days. Since he is an Indian citizen leaving for employment, only the 182-day condition applies, and he satisfies it. He is resident. For RNOR, he was resident in two of ten years, so he was not non-resident in nine out of ten years. His seven-year stay was 731 days, which is more than 729 days. Therefore, he is resident and ordinarily resident.

Where it goes wrong. The figure 731 is just above the 729-day threshold; using 729 or less would wrongly make him RNOR.

Authority. Section 6(1) of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 11 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Farah Khan, a person of Indian origin residing in Dubai, visited India during FY 2026-27 and stayed for 150 days. Her total income other than income from foreign sources was ₹15,00,000. Her stay in the four preceding tax years was 400 days. What is her residential status for FY 2026-27?

1. Resident and ordinarily resident, because she stayed more than 120 days and 365 days in four years
2. Resident but not ordinarily resident, because her income other than foreign sources is ₹15 lakh
3. Non-resident, because only the 182-day condition applies and she stayed 150 days (correct answer)
4. Resident but not ordinarily resident, because she is a person of Indian origin visiting India

Answer: C — Non-resident, because only the 182-day condition applies and she stayed 150 days

Explanation. For a visiting person of Indian origin, the second basic condition is not applied where total income other than income from foreign sources does not exceed ₹15,00,000. The 120-day route applies only where such income exceeds ₹15,00,000. Since her income is ₹15,00,000 and not above it, only the 182-day condition applies. She stayed 150 days, which is less than 182 days. Therefore, she is non-resident for FY 2026-27.

Where it goes wrong. The threshold uses the word exceeds; income equal to ₹15 lakh does not attract the 120-day route.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 12 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Arjun Mehta, an Indian citizen residing in Singapore, visited India during FY 2026-27 for 121 days. His total income other than income from foreign sources was ₹15,00,001. His stay in the four preceding tax years was 366 days. What is his residential status for FY 2026-27?

1. Non-resident, because he stayed less than 182 days in India during FY 2026-27
2. Resident and ordinarily resident, because he satisfied the 120-day and 365-day conditions
3. Non-resident, because the 120-day route applies only to persons of Indian origin and not to Indian citizens
4. Resident but not ordinarily resident, because he satisfies the 120-day route and stayed less than 182 days (correct answer)

Answer: D — Resident but not ordinarily resident, because he satisfies the 120-day route and stayed less than 182 days

Explanation. Mr. Arjun is an Indian citizen visiting India. His total income other than income from foreign sources is ₹15,00,001, which exceeds ₹15,00,000. He stayed 121 days in FY 2026-27 and 366 days in the four preceding tax years. The modified condition of 120 days plus 365 days is satisfied, so he is resident. Since he stayed less than 182 days and the 120-day route applies, he is RNOR under section 6(6). The route is available to both Indian citizens and persons of Indian origin.

Where it goes wrong. Students may think the 120-day route is only for persons of Indian origin or may ignore the income exceeding ₹15 lakh.

Authority. Section 6(1) proviso of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 13 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Sameer Qureshi, an Indian citizen, is a crew member of a foreign-bound Indian ship on an eligible voyage from 1 May 2026 to 30 September 2026, both dates included. Outside this voyage, he was in India for 40 days during FY 2026-27. His stay in the four preceding tax years was 400 days. What is his residential status for FY 2026-27?

1. Non-resident, because his countable stay is 40 days and the second basic condition is inapplicable (correct answer)
2. Resident but not ordinarily resident, because he stayed 40 days and 400 days in four years
3. Resident and ordinarily resident, because the voyage period is treated as stay in India
4. Non-resident, because he is a crew member and therefore cannot be resident in India

Answer: A — Non-resident, because his countable stay is 40 days and the second basic condition is inapplicable

Explanation. The eligible voyage period from 1 May to 30 September 2026 is excluded for an Indian citizen crew member. Outside the voyage, Mr. Sameer was in India for 40 days. For such a crew member, the second basic condition of 60 days plus 365 days is not applied. He can be resident only if the countable stay is 182 days or more. Since 40 days is below 182 days, he is non-resident for FY 2026-27.

Where it goes wrong. Crew members are not automatically non-resident; the exclusion and the 182-day condition must be applied to the countable stay.

Authority. Section 6(1) of the Income-tax Act, 1961; Rule 8 of the Income-tax Rules, 1962

Question 14 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Lucas Martin, a French citizen, visited India during FY 2026-27 and stayed for 100 days. He had stayed in India for 500 days in the four preceding tax years and 600 days in the seven preceding tax years. He was non-resident in eight out of the ten preceding tax years. What is his residential status for FY 2026-27?

1. Non-resident, because a foreign national cannot satisfy the 60-day plus 365-day condition
2. Resident but not ordinarily resident, because he satisfies the second basic condition and the 729-day test (correct answer)
3. Resident and ordinarily resident, because he stayed 500 days in the four preceding tax years
4. Non-resident, because he stayed only 100 days, which is less than 182 days in FY 2026-27

Answer: B — Resident but not ordinarily resident, because he satisfies the second basic condition and the 729-day test

Explanation. Mr. Lucas is not an Indian citizen or a person of Indian origin, so the visiting exceptions do not apply. He stayed 100 days in FY 2026-27, which is 60 days or more, and 500 days in the four preceding tax years, which is 365 days or more. He satisfies the second basic condition and is resident. For RNOR, he was non-resident in eight out of ten years, so the 9-out-of-10 test is not met; however, his seven-year stay of 600 days is within 729 days. Hence, he is RNOR.

Where it goes wrong. Students may wrongly apply the 182-day-only rule to all foreign nationals; the 60-day plus 365-day condition applies unless an exception covers the person.

Authority. Section 6(1) of the Income-tax Act, 1961; Section 6(6) of the Income-tax Act, 1961

Question 15 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Riya Kapoor, an Indian citizen, left India for employment in Germany on 11 June 2026. She was in India from 1 April 2026 to 11 June 2026, both dates included. Her stay in the four preceding tax years was 800 days. What is her residential status for FY 2026-27?

1. Resident but not ordinarily resident, because she stayed more than 60 days and 800 days in four years
2. Resident and ordinarily resident, because she had 800 days of stay in the four preceding tax years
3. Non-resident, because her stay is less than 182 days and the second basic condition is inapplicable (correct answer)
4. Non-resident, because an Indian citizen leaving for employment is always treated as non-resident

Answer: C — Non-resident, because her stay is less than 182 days and the second basic condition is inapplicable

Explanation. Ms. Riya stayed from 1 April to 11 June 2026, both dates included: 30 + 31 + 11 = 72 days. She is an Indian citizen leaving India for employment outside India, so the second basic condition of 60 days plus 365 days is not applied. Only the 182-day condition applies. Since 72 days is below 182 days, she is non-resident for FY 2026-27. The 800-day stay in four preceding years cannot be used because the second condition is inapplicable.

Where it goes wrong. The 800 days in four preceding years is irrelevant once the employment exception removes the second basic condition.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 16 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Pranav Desai was resident in India for FY 2026-27. He was non-resident in eight out of the ten tax years preceding FY 2026-27. His cumulative stay in India during the seven tax years preceding FY 2026-27 was 728 days. What is his residential status for FY 2026-27?

1. Resident and ordinarily resident, because he was non-resident in only eight out of ten preceding years
2. Non-resident, because his seven-year stay is less than 730 days
3. Resident and ordinarily resident, because 728 days is close to the 730-day threshold
4. Resident but not ordinarily resident, because his seven-year stay is 729 days or less (correct answer)

Answer: D — Resident but not ordinarily resident, because his seven-year stay is 729 days or less

Explanation. Mr. Pranav is already resident for FY 2026-27. Under section 6(6), an individual is RNOR if he was non-resident in nine out of ten preceding years or stayed in India for 729 days or less in the seven preceding years. He was non-resident in eight years, so the first test is not met. His seven-year stay is 728 days, which is within 729 days. Therefore, he is resident but not ordinarily resident for FY 2026-27.

Where it goes wrong. Students may use 730 days as the RNOR cut-off; the statutory test is 729 days or less for RNOR.

Authority. Section 6(6) of the Income-tax Act, 1961

Question 17 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Ananya Iyer was resident in India for FY 2026-27. She was non-resident in eight out of the ten preceding tax years. Her cumulative stay in India during the seven preceding tax years was 730 days. What is her residential status for FY 2026-27?

1. Resident and ordinarily resident, because neither RNOR condition under section 6(6) is satisfied (correct answer)
2. Resident but not ordinarily resident, because she was non-resident in eight out of ten preceding years
3. Resident but not ordinarily resident, because her seven-year stay was only 730 days
4. Non-resident, because 730 days is below the 731-day threshold for ordinary residence

Answer: A — Resident and ordinarily resident, because neither RNOR condition under section 6(6) is satisfied

Explanation. Ms. Ananya is resident for FY 2026-27. For RNOR, she must be non-resident in nine out of ten preceding years or have a seven-year stay of 729 days or less. She was non-resident in eight years, so the first test is not met. Her seven-year stay is 730 days, which is more than 729 days, so the second test is also not met. Therefore, she is resident and ordinarily resident, not RNOR.

Where it goes wrong. The 730-day figure is often confused with the 729-day RNOR threshold; 730 days supports ROR, not RNOR.

Authority. Section 6(6) of the Income-tax Act, 1961

Question 18 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Rehan Ali, an Indian citizen residing in Qatar, visited India for 119 days during FY 2026-27. His total income other than income from foreign sources was ₹16,00,000. His stay in the four preceding tax years was 500 days. What is his residential status for FY 2026-27?

1. Resident but not ordinarily resident, because his income exceeds ₹15 lakh and he stayed 119 days
2. Non-resident, because he stayed less than 120 days and the 182-day condition is not satisfied (correct answer)
3. Resident and ordinarily resident, because he stayed 500 days in the four preceding tax years
4. Non-resident, because an Indian citizen visiting India cannot become resident unless he stays 182 days

Answer: B — Non-resident, because he stayed less than 120 days and the 182-day condition is not satisfied

Explanation. Mr. Rehan is an Indian citizen visiting India with total income other than income from foreign sources exceeding ₹15,00,000. The modified route requires 120 days or more in FY 2026-27 and 365 days or more in the four preceding tax years. He stayed 119 days, which is below 120 days. The first basic condition requires 182 days, which he also does not satisfy. Therefore, he is non-resident for FY 2026-27, despite the 500-day stay in the four preceding years.

Where it goes wrong. The 120-day threshold is not met by 119 days; the four-year stay cannot cure the current-year shortfall.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 19 · 2 marks · Taxation - DT Ch 02: Residential Status · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Vikram, an Indian citizen who had never gone abroad previously, left India for the purpose of employment in Germany on 1 September 2026. What is his residential status for Tax Year 2026-27?

1. Resident and Ordinarily Resident
2. Resident but Not Ordinarily Resident
3. Non-Resident (correct answer)
4. Deemed Resident

Answer: C — Non-Resident

Explanation. An Indian citizen leaving India for employment abroad qualifies for the relaxation where only the 182-day stay condition applies. Mr. Vikram's stay in India during Tax Year 2026-27 (from 1 April 2026 to 1 September 2026) was 30 + 31 + 30 + 31 + 31 + 1 = 154 days. Since his stay is less than 182 days, he is classified as a Non-Resident.

Where it goes wrong. Students may ignore the actual day count and assume employment abroad automatically makes the person non-resident.

Authority. Section 6(1) proviso of the Income-tax Act, 1961

Question 20 · 2 marks · Taxation - DT Ch 02: Residential Status · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Ethan Clarke, a British citizen, visited India during FY 2026-27 and stayed for 59 days. His stay in the four preceding tax years was 1,000 days. He has no income from Indian sources and is not covered by any visiting exception. What is his residential status for FY 2026-27?

1. Resident and ordinarily resident, because he stayed 1,000 days in the four preceding tax years
2. Resident but not ordinarily resident, because he stayed 59 days and 1,000 days in four years
3. Resident but not ordinarily resident, because his seven-year stay is not given
4. Non-resident, because he stayed less than 60 days in FY 2026-27 (correct answer)

Answer: D — Non-resident, because he stayed less than 60 days in FY 2026-27

Explanation. Mr. Ethan is a foreign national and no visiting exception applies. Under section 6(1), he is resident only if he stayed 182 days or more, or if he stayed 60 days or more in FY 2026-27 and 365 days or more in the four preceding tax years. He stayed 59 days, which is below 60 days, so the second basic condition is not satisfied. The first condition is also not satisfied. Therefore, he is non-resident for FY 2026-27, even though his four-year stay was 1,000 days.

Where it goes wrong. The 1,000-day figure is irrelevant unless the current-year stay reaches 60 days; 59 days fails the second basic condition.

Authority. Section 6(1) of the Income-tax Act, 1961