There are several conditions wherein tax laws have a different meaning as compared to normal terms and this is also applicable when it comes to people of Indian origin.
There are a lot of Indians who have settled abroad and are residents in some foreign country or they have even become citizens there.
When this has actually happened then there would be a requirement for them to meet conditions under various foreign laws, but at the same time their position under the Indian income tax law also needs to be considered.
This would have the presence of several conditions that might be applicable to people who are of Indian origin. So the term as to who would be covered under person of Indian origin becomes an important one to consider.
Also read: Bringing down capital gains tax for individuals
Residential status
When it comes to the determination of the residential status then there are several basic conditions that need to be fulfilled for being a resident and ordinarily resident.
This would include being in India for a period of 182 days or more during the previous year or being in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
However for people of Indian origin who comes on a visit to India under the second condition the period of 60 days is substituted by 182 days to be classified as a resident and ordinary resident. This raises the importance of the fact that there has to be a closer look at who all would be covered.
Place of birth
For a person to be deemed to be of Indian origin the place of birth becomes a very important consideration as this is the primary factor that determines this point.
There are three categories of people who might have been born in India and they would confer the category of a person of Indian origin on the individual. The first would be the person themselves.
So it could be that the individual is a citizen of some foreign country but because the birth took place in India he becomes a person of Indian origin.
The other condition relates to a situation if either of his parents were born in India. The key word here is either as it is not necessary that both the parents have to be born in India. Even if just one of them has been born then it is enough for the person to be classified as that of Indian origin.
There are a lot of situations wherein one of the parents is foreign born and in this case the overall classification of being of Indian origin cannot be avoided. The final condition is that if either of the grandparents were born in India then the same condition would apply.
This term has an even wider implication because it could be either of the four grandparents and this could end up in a wide coverage.
Undivided India
One of the important conditions that need to be seen is that the term India is also quite widely defined for the purpose of the coverage. This includes current boundaries of India and also undivided India.
The inclusion of the term undivided India would bring into play the territories of the neighbouring countries that were then separated later into different countries and it is likely that one of the grand parents might not have been born in India but in one of these places which comprised of undivided India at that point of time.
This is significant because one has to be very careful while looking at the overall tax conditions as one might get covered and hence have a tax liability that they might not have known existed.
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