The Hindu Business Line : Study is no employment

BY VIRTUE of explanation (a) to Section 6(1)(c) of the Act, if an individual leaves India for employment outside India, it is understood that 60 days stay outside India as contemplated by Section 6(1)(c) is to be reckoned as 182 days.

Will this explanation also cover a situation where a person leaves India to do his masters or Ph.D. and gets a stipend from the employment by the university as a research or teaching assistant?

Karthik

Reply

It appears that the benefit of explanation (a) to Section 6(1)(c), that is, the 60-day period referred to in Section 6(1)(c) being reckoned as 182 would not be available to you.

Under Section 6 of the I-T Act, an individual is resident in India if he satisfies any one of the following conditions:

He is in India for 182 days or more in the previous year.

He is in India for 60 days (182 days if he leaves India to take up employment outside India if he is a citizen of India; or being outside India comes to India on visit if he is a citizen of India or a person of Indian origin) or more in the previous year and for 365 days or more in the four years preceding the previous year.

He is resident but not ordinarily resident if he satisfies any of the following conditions:

a) Non-resident in nine out of the 10 years preceding the previous year;

b) In India for 729 days or less in the seven years preceding the previous year.

What is stated within brackets arises as a result of the explanations to Section 6(1)(c). It can be seen that this explanation seeks to relax the provisions of Section 6(1)(c).

This will mean that he may become a non-resident despite being in India for 182 days in the previous year as against 60 days as contemplated by Section 6(1)(c).

The point for consideration is whether the term "for the purpose of employment outside India" will also include a case where the person leaves India only for study and incidentally also receives a stipend for being a teaching/research assistant at the university where he undertakes study. The explanation clearly spells out that the purpose of leaving India should be for employment purposes.

In the instant case, it cannot be said that the purpose of leaving India is for employment. It is only for study and, therefore, it is felt that the benefit of the explanation would not be available.

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