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Residential Status Of HUF (Hindu Undivided Family) - under the 'Income Tax Act.' [Section 6(2)]

Residential Status Of HUF

When is HUF said to be a Resident in India?

A HUF is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

When is HUF said to be a Non-Resident?

A HUF is said to be non-resident in India if during the previous year, the control and management of its affairs is situated wholly outside India.

In other words it will be non-resident in India if no part of the control and management of its affairs is situated in India.

Residential Status Of HUF

Control and management refers to the decisions taken regarding affairs of the HUF. The control and management lies at the place where decisions regarding the affairs of the HUF are taken.

Once the HUF is a resident in India, it is to be further determined whether it is:

  1. resident and ordinarily resident in India; or

  2. resident but not ordinarily resident in India.

When is HUF said to be a Resident and Ordinarily Resident in India?

The HUF shall be said to be resident and ordinarily resident in India if the karta of the HUF satisfies both the following conditions:

  1. He (Karta) must be resident in at least 2 out of 10 previous years immediately preceding the relevant previous year; and

  2. He must be in India for at least 730 days during 7 previous years immediately preceding the relevant previous year.

When is HUF said to be Resident but Not Ordinarily Resident in India? [Section 6(6)(b)]:

A HUF, which is resident in India, is said to be resident but not ordinarily resident in India during the relevant previous year, if the manager (Karta) of the HUF does not satisfy any one, or both, of the conditions mentioned in clauses (a) and (b) above.

For determining whether HUF is a Resident or not, the residential status of its 'Karta' for the relevant previous year is of no relevance. But for determining whether HUF is ordinarily Resident in India or not, Karta's status for the preceding years becomes relevant.

Excepting individual and HUF, all other persons are classified either as resident or non-resident. They are not to be further classified as ordinarily resident or as not ordinarily resident.

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Residential Status of an Assessee
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