Income Charged to tax in India in hands of Resident/Non-Resident Tax Payer

 

  • Which incomes are charged to tax in India in the hands of a taxpayer

The following chart highlights the tax incidence in case of different persons:

Nature of income

Residential status

Residential status

​​ Residential status

ROR (*)

RNOR (*)

NR (*)

Income which accrues or arises in India

Taxed

Taxed

Taxed

Income which is deemed to accrue or arise in India

Taxed

Taxed

Taxed

Income which is received in India

Taxed

Taxed

Taxed

Income which is deemed to be received in India

Taxed

Taxed

Taxed

Income accruing outside India from a business controlled from India or from a profession set up in 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.​

  • Which incomes are deemed to be received in India

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

  • Interest credited to recognized provident fund account of an employee in excess of 9.5% per annum.
  • Employer's contribution to recognized provident fund in excess of 12% of the salary of the employee.
  • Transferred balance in case of reorg​anisation of unrecognized provident fund.

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

  • What incomes are deemed to have accrue or arise in India

Following incomes are treated as incomes deemed to have accrued or arisen in India:

  • Capital gain arising on transfer of property situated in India.
  • Income from business connection in India.
  • Income from salary in respect of services rendered in India.
  • Salary received by an Indian national from Government of India in respect of service rendered outside India. However, allowances and perquisites are exempt in this case.
  • Income from any property, asset or other source of income located in India.
  • Dividend paid by an Indian company.
  • Interest received from Government of India.
  • Interest received from a resident is treated as income deemed to have accrued or arisen in India in all cases, except where such interest is earned in respect of funds borrowed by the resident and used by resident for carrying on business/profession outside India or is in respect of funds borrowed by the resident and is used for earning income from any source outside India.
  • Interest received from a non-resident is treated as income deemed to accrue or arise in India if such interest is in respect of funds borrowed by the non-resident for carrying on any business/profession in India.
  • Royalty/fees for technical services received from Government of India.
  • Royalty/fees for technical services received from resident is treated as income deemed to have accrued or arisen in India in all cases, except where such royalty/fees relates to business/profession/other source of income carried on by the payer outside India.

Royalty/fees for technical services received from non-resident is treated as income deemed to have accrued or arisen in India if such royalty/fees is for business/profession/other source of income carried by the payer in India.

 

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