Page 44 - DCOM301_INCOME_TAX_LAWS_I

Unit 2: Residential Status and Taxation

The above provisions may be explained in brief as follows: Notes
Whether income is received (or Whether income accrues (or arises Status of the income
deemed to be received) in India or is deemed to accrue or arise) in
during the relevant year India during the relevant year
Yes Yes Indian income
Yes No Indian income
No Yes Indian income
No No Foreign income

Notes Indian income – Indian income is always taxable in India irrespective of the
residential status of the taxpayer.
Foreign income – Foreign income is taxable in the hands of resident or resident and
ordinarily resident in India. It is not taxable in the hands of non-resident in India.
Following table shows the overall scope of income and its income tax chargeability in case of
Resident and Non-resident:

Income Resident and Resident and Non-
Ordinary Not ordinary Resident
Resident Resident
1. Income received or deemed to be
received in India whether earned in Taxable Taxable Taxable
India or elsewhere
2. Income which accrues or arise or
deemed to accrue or arise in India Taxable Taxable Taxable
during the previous year, whether
received in India or elsewhere.
3. Income which accrues or arises
outside India and received outside Taxable Taxable Not
India from a business controlled from Taxable
India
4. Income which accrues or arises
outside India and received outside Taxable Not Taxable Not
India in the previous year from any Taxable
other source
5. Income which accrues or arises
outside India and received outside Not Taxable Not Taxable Not
India during the years preceding the Taxable
previous year and remitted to India
during the previous year.

For any other taxpayer like company, firm, co-operative society, association of persons, body of
individual, etc. the incidence of tax would include:

Types of Income Resident in India Non-resident in India
Indian income Taxable in India Taxable in India
Foreign income Taxable in India Not taxable in India

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