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Incomes received or deemed to be received in
India [Section 7]

Received in India: Any income which is received in India, during the previous year by any assessee, is liable to tax in India, irrespective of the residential status of the assessee and the place of accrual of such income.


Receipts means the first receipt: The receipt of income refers to the first occasion when the recipient gets the money under his own control. Once an amount is received as income, any remittance or transmission of the amount to another place does not result in receipt within the meaning of this clause at the other place.


Income deemed to be received in India: The following incomes shall be deemed to be received in India in the previous year even in the absence of actual receipt:

• Contribution made by the employer in excess of 12% of the salary of the employee to Recognized Provident Fund.

• Interest credited on the balance to the credit of the employee at a rate exceeding a rate fixed by the Central Government which at present is 9.5%.

• Transferred balance in a Recognized Provident Fund to the extent provided in rule 11(4) of Part A of IVth Schedule (It has been discussed in the Chapter on 'Income from Salaries');
  

• The contribution made, by the Central Government or any other employer in the previous year, to the account of an employee under a notified pension scheme referred to in section 80CCD;
  

• Tax deducted at source is deemed to be received in the hands of the payee [Section 198];
  

• Investments, expenditure, cash credits detected during the previous year which are unexplained and cash, bullion, gold, jewelery or other valuable articles in respect of which the assessee offers no satisfactory explanation about the nature and source of its acquisition shall be treated as income deemed to be received. [Sections 68, 69, 69A, 69B and 69C];
  

• Deemed profit chargeable to tax under sections 41 and 59.
  

Incomes which accrue or arise in India or are deemed to accrue or arise in India [Section 9]

(1) Accrue or arise in India: 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase. 'Arising' means 'coming into existence or notice or presenting itself'. 'Accrue' connotes growth or accumulation with a tangible shape so as to be receivable. In a secondary sense, the two words together mean 'to become a present and enforceable right' and 'to become a present right of demand'.

(2) Incomes which are deemed to accrue or arise in India [Section 9]: The following incomes shall be deemed to accrue or arise in India:


Business connections may be in several forms e.g. a branch office in India or an agent or an organization of a non-resident in India. Formation of a subsidiary company in India to carry on the business of the non-resident parent company would also be a business connection in India.


In the case of a Non-Resident the following shall not, however, be treated as business connection in India:

In the case of a business of which all the operations are not carried out in India, only such part of the income as is reasonably attributable to operations carried out in India shall be treated as deemed to accrue or arise in India.


While salary of Indian citizen in the above case shall be deemed to accrue or arise in India but all allowances or perquisites paid outside India by the Government to the above Indian citizens for their rendering services outside India are exempt under section 10(7).