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Residential Status of HUF.

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June 5, 2021 |

6 mins read

Bird’s Eye view of the ‘Residential Status of HUF’

Concept of taxation Non-Resident Taxation
Provision of Income Tax Act, 1961 Section 6- Residential Status
Types of Residential Status
  • Resident and Ordinarily Resident (ROR)
  • Non-Resident and Ordinarily Resident (NROR)
  • Non-Resident
Factor for determining residency Place of Control and Management i.e. Residential Status of Karta

Residential Status of a HUF, Firm, AOP/BOI, Local Authorities and Artificial Juridical Persons

Residential Status of HUF – An HUF, Firm, AOP/BOI, local authorities and artificial juridical person would be a resident in India if the control and management of their affairs is situated wholly or partly in India.

While a resident HUF,  can additionally be an ROR or RNOR , Firms, Association of persons, Local Authorities and other artificial juridical persons can only be either resident or non-resident.

Points to consider

  • If the control and management of the affairs is situated wholly outside India it would become a non-resident.
  • Control and Management of HUF is with its Karta or its Manager.
  • Control and Management of Firm/AOP is with its Partners/Members.

Residential Status of a HUF –  ROR or RNOR

 As discussed above, an HUF, would be a resident in India,  if the control and management of their affairs is situated wholly or partly in India. Further, the control and management of HUF is with the Karta.

An resident HUF, can additionally be an ROR or RNOR, depending on whether the Karta of the Resident HUF,  satisfies both the additional conditions (applicable to Individuals), i.e  : –

  • Karta of Resident HUF should be resident in at least 2 previous years out of 10 previous years immediately preceding relevant previous year.
  • Stay of Karta during 7 previous year immediately preceding relevant previous year should be 730 days or more.

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Note : –

If the Karta of the HUF fails to satisfies both the   additional conditions, such Karta would be a Resident but not ordinarily resident in India.

Residential Status of HUF – Example 1 : –

The head office of XYZ, HUF was situated in UK. What would be the residential status of HUF (resident or non-resident) for PY 2017-18 when affairs of HUF are managed from –

  1. UK , entirely;
  2. Partly from India and partly from UK

Solution : –

a) The residential status of HUF would be non-resident, as it is wholly managed from outside India
b) The residential status of HUF would be resident as it is partly managed from India.

Residential Status of HUF – Example 2 : –

Determine the residential Status in clause (b) in the above example, if the Karta of HUF is present in India for more than 730 days during the preceding 7 years. He is also resident in India in 8 years out of preceding 10 years..

Solution : –

Since the Karta of the Resident HUF,  satisfies both the additional conditions (applicable to Individuals), , HUF would be resident and ordinarily resident in India.

Summary of various criterions to determine the Residential Status – Section 6 of Income Tax Act

SUMMARY OF VARIOUS CRITERIONS TO DETERMINE THE RESIDENTIAL STATUS - SECTION 6

Related Content

Residential Status –  Section 6 of Income Tax Act

Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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