Rule Of Taxation On The Basis Of Residential Status Of The Assessee

The following chart highlights the tax incidence in case of different persons on the basis of their residential status :

 

Nature of income

Residential status

 

ROR (*)

RNOR (*)

NR (*)

Income accrued in India

Taxed

Taxed

Taxed

Income deemed to be accrued in India

Taxed

Taxed

Taxed

Income received in India

Taxed

Taxed

Taxed

Income deemed to be received in India

Taxed

Taxed

Taxed

Income other than above, but from a business controlled from India

Taxed

Taxed

Not Taxed

Income other than above (i.e., income which has no relation with India)

Taxed

Not Taxed

Not Taxed

 

(*)        ROR means Resident And Ordinarily Resident.

RNOR means Resident, But Not Ordinarily Resident.

NR means NON-RESIDENT.

 

Income deemed to be received in India

Following incomes are treated as incomes deemed to be received in India :

 

        Interest credited to recognised provident fund account of an employee in excess of 9.5% per annum.

        Employer’s contribution to recognised provident fund in excess of 12%.

        Transfer balance in case of reorganisation of unrecognised provident fund.

        Tax deducted at source.

        Contribution by the Central Government or other employer to the account of the employee in case of notified pension scheme refered to in section 80CCD.

 

Income deemed to accrue or arise in India

Following incomes are treated as incomes deemed to accrue or arise in India :

 

        Capital gain arising on transfer of property situated in India is treated as an income deemed to accrue or arise in India.

        Income from business connection in India is treated as an income deemed to accrue or arise in India.

        Income from salary in respect of service rendered in India is treated as an income deemed to accrue or arise in India.

        Salary received by an Indian national from Government of India in respect of service rendered outside India is treated as an income deemed to accrue or arise in India. However, allowances and perquisites are exempt in this case.

        Income from any property, asset or other source of income located in India is treated as an income deemed to accrue or arise in India.

        Dividend paid by an India company is treated as an income deemed to accrue or arise in India.

        Interest/royalty/fees for technical services received from Government of India are treated as income deemed to accrue or arise in India.

        Interest/royalty/fees for technical services received from resident/non-resident are treated as income deemed to accrue or arise in India, if such interest is in respect of funds borrowed for carrying on business/profession in India or such royalty/fees is for business/profession/other source of income which is located in India.

 
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