Relation between residential status and incidence of tax [sec 5]: Incidence of tax on tax payer depends on his

residential status & the place and time of accrual or receipt of income. Indian income and foreign income: Indian income- Any of the following three is an Indian income. 1. If income is received in India & accrued or arise in India during the previous year OR Deemed to be received or accrued or arise in India during the previous year. 2. If income is received ( or deemed to received ) in India during the previous year but it accrues ( or arises ) out side India during the previous year. 3. If income is received outside India during the previous year but it accrues (or deemed to accrue or arise ) in India during the previous year. Foreign Income If following two conditions are satisfied, then such Income is foreign income. 1. Income is not received (or not deemed to be received) in India; & 2. Income does not accrue or arise (or does not deem to accrue or arise) in India.

Incidence of tax for different taxpayers

Incidence of tax for Individuals & HUF R and O R in India
Indian income Foreign income - If it is income from business or profession:Business controlled wholly or partly from India or profession set up in India. Business is controlled from Outside India or profession Set up outside India. Taxable in India R but NOR in India Non-Resdent In India

Taxable in India Taxable in India

Taxable in India

Taxable in India Not taxable in India

Taxable in India

Not taxable in India Not taxable in India

Not taxable in India Not taxable in India

- Any other foreign income ( like salary, rent , interest, etc.) Taxable in India

Incidence of tax of any other tax payer ( like company, firm, AOP, BOI, cooperative society etc.) Resident in India Indian income Foreign income
Taxable in India Taxable in India

Non-resident in India
Taxable in India Not taxable in India

Problems on incidence of tax under different residential status

1. Following particulars of income of Mr. Niranjan Keni for Assesment year 2011-2012 are given to you: a) Profit from business in Indonesia, controlled from India Rs.82000/-. b)Profit from sale of building in Goa Received in Dubai Rs.20000/c) Income from Agriculture in Sri lanka Rs.35000/-. Calculate his total income if he is i) Resident and Ordinarily Resident ii) Resident but Not Ordinarily Resident iii) Non Resident

2. Specify which of the following incomes would be included in the gross total income of Mr. Stephen an Indian citizen whose residential status is that of Resident but not ordinarily resident: i)Interest from bank account in India Rs.2000/ii)Profit on sale of plant at Delhi Rs.20000/- ( 50%of which is received in London. ) iii) Salary earned and received in London Rs.21000/-. iv) Income from business in London controlled from India Rs.15000/-. v) Income from property in London Rs.10000/- received in London. Kindly give justification for your answer. 3. Following particulars of income of shri prathaesh Rao for the assessment year 2011-2012are given below: i) Profit from business at Germany controlled from France Rs.35000/ii) Income earned in India but received in France Rs.60000/-. iii) Income from house property in Iraq received in India Rs.18000/-. iv) Interest on debentures of Indian company received abroad Rs.50000/-. Calculate his total income if he is i) Resident and Ordinarily Resident ii) Resident but Not Ordinarily Resident iii) Non Resident 4. The following are the incomes of Mr. Suraj for thr previous year ended 31st March 2011. i) Profit from sale of machinery in Delhi but received in U.K. Rs.25000/-. ii) Profit from business in India controlled from New York. Rs.40000/-. iii) Profit from business in Africa, controlled from India (one third received in India) Rs.90000/-. Compute his gross total income for the assessment year 2011-2012 if he is a) Resident and Ordinarily resident b) Resident but not ordinarily resident c) Non-resident. 5. Mr. Akash had the following incomes during the assessment year 2011-2012. i) Income from business in Sri lanka controlled from India Rs.210000/-. ii) Salary earned and received in U.K. Rs.120000/-. iii) Inrerest on bank account in U.S.A. received in U.S.A. Rs.100000/-. iv) Income from house proprety in India received in Switzerland Rs.55000/-. Compute his gross total income for the assessment year 2011-2012 if he is a) Resident and Ordinarily resident b) Resident but not ordinarily resident c) Non-resident