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Highlights of provisions of incidence of tax: An analysis of the above provisions would highlight the following: a) Any income which is either received in India or deemed to be received in India is taxable in India, irrespective of the residential status. b) Any income which is either earned in India or is deemed to be earned in India is taxable in India, irrespective of the residential status. c) For a Resident in India (for individual & HUF, resident and ordinarily resident in India) all global income, wherever earned/received is taxable in India. d) For a non-resident, an income is taxable only if it is either earned in India or it is received in India. e) For not ordinarily resident, income earned and received outside India will be taxable, only when it is from a business or profession controlled or set up in India. |
The provisions regarding incidence of tax above may be summarized in the following table:
|
Particulars of Income |
Whether taxable |
||
|
ROR |
RNOR |
NR |
|
|
1. Income received or deemed to be received in India whether earned in India or elsewhere. |
Yes |
Yes |
Yes |
|
2. Income which accrues or arises or is deemed to accrue or arise in India during the previous year, whether received in India or elsewhere. |
Yes |
Yes |
Yes |
|
3. Income which accrues or arises outside India and received outside India from a business controlled from India. |
Yes |
Yes |
No |
|
4. Income which accrues or arises outside India and received outside India in the previous year from any other source. |
Yes |
No |
No |
|
5. Income which accrues or arises outside India and received outside India during the years preceding the previous year and remitted to India during the previous year. |
No |
No |
No |
Illustration
Compute the tax liability in the following cases:
-
|
Nature of Income |
Amount |
ROR |
RNOR |
NR |
|
Rent from a property in Delhi received in USA |
80,000 |
|
|
|
|
Income from a business in USA controlled from Delhi. |
1,20,000 |
|
|
|
|
Income from a business in Bangalore controlled from USA |
1,80,000 |
|
|
|
|
Rent from a property in USA received there but subsequently remitted to India |
60,000 |
|
|
|
|
Interest from deposits with an Indian company received in USA |
20,000 |
|
|
|
|
Profits for the year
2006-07 of a business in USA remitted to
India
during the
previous year 2007-08 (Not taxed earlier)
|
75,000 |
|
|
|
|
Gifts received from his parents |
45,000 |
|
|
|
|
TOTAL |
|
|
|
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