Broadly income can be divided into two categories :
- Indian Income
- Foreign Income
A. Indian Income
Indian income is called by various words and names. These are
(1) Income earned in India.
(2) Income accrues and arises in India.
(3) Income received or deemed to be received in India.
(4) Income payable in India. Income may have been earned in a foreign country but it is payable in India.
(5) Income earned (or accrues) in India but is is received or payable outside India.
B. Foreign Income
Following types of incomes are called foreign incomes
(1) Income earned (or accrues) outside India and also received outside India.
(2) Any income which is not earned or accrues or arises in India.
1. Income Received In India
Receipt of a particular income in India attracts tax liability. The essential fact is that a person must receive income in India during the relevant previous year. The income may be received by the assessee himself or by his agent, banker or broker on his behalf in India. It is not essential that a person must receive income either from business or salary. Assessee may receive income from any source.
All persons are assessable on income received in India during the relevant preyious year irrespective of the residential status.
Income received in money or money’s worth is taxable. Only thing essential is that it must be certain that the receipt in the form of money’s worth must be income.