Page 39 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes The above provisions may be explained in brief as follows:

Table 2.1: Conditions for Deciding Status of Income

Whether income is received (or Whether income accrues (or arises or Status of the
deemed to be received) in India is deemed to accrue or arise) in India income
during the relevant year 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:

Table 2.2: Income Tax Chargeability in Case of Resident and Non-resident
Income Resident and Resident and Non-resident
Ordinary Not ordinary
Resident Resident
1. Income received or deemed to be received in India Taxable Taxable Taxable
whether earned in India or elsewhere
2 Income which accrues or arise or deemed to Taxable Taxable Taxable
accrue or arise in India during the previous year,
whether received in India or elsewhere.
3. Income which accrues or arises outside India and Taxable Taxable Not Taxable
received outside India from a business controlled
from India
4. Income which accrues or arises outside India and Taxable Not Taxable Not Taxable
received outside India in the previous year from
any other source
5. Income which accrues or arises outside India and Not Taxable Not Taxable Not Taxable
received outside India during the years preceding
the 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:
Table 2.3: Incidence of Tax for Resident/non-resident Indians
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

34 LOVELY PROFESSIONAL UNIVERSITY