Module: | MODULE A: INTERNATIONAL BANKING
Q186: Consider the following statements regarding the definition of a Person Resident in India under the Foreign Exchange Management Act:
1. An individual is considered a resident if they reside in India for more than 182 days during the course of the preceding financial year.
2. An individual who goes out of India for the purpose of taking up employment is immediately classified as a person resident outside India, regardless of their stay in the preceding year.
3. Branches, offices, or agencies in India owned or controlled by a person resident outside India are excluded from the definition of a resident in India.
Which of the statements given above is or are correct?
2. An individual who goes out of India for the purpose of taking up employment is immediately classified as a person resident outside India, regardless of their stay in the preceding year.
3. Branches, offices, or agencies in India owned or controlled by a person resident outside India are excluded from the definition of a resident in India.
Which of the statements given above is or are correct?
✅ Correct Answer: A
🎯 Quick Answer:
Option A is correct because only statements 1 and 2 are accurate.Structural Breakdown: The foundational rule is the 182 days physical presence test in the preceding financial year.
However, intent matters.
Statement 2 is correct because the moment an Indian leaves the country for employment, business, or any purpose indicating an uncertain period of stay abroad, they instantly become a non-resident.
Statement 3 is incorrect because the Act explicitly defines any branch, office, or agency in India owned or controlled by a foreign entity as a Person Resident in India for regulatory purposes.
Historical Context: The definition under this Act differs significantly from the Income Tax Act.
The Income Tax Act focuses purely on the number of days for taxation, whereas the foreign exchange law focuses heavily on the intention and economic interest of the person.
Causal Reasoning: The causal rationale for immediately classifying an emigrating worker as a non-resident is to allow them immediate access to non-resident banking facilities, enabling them to remit their foreign earnings back to India seamlessly.