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INTRODUCTION The preamble of the constitution contains the concept of welfare state. To carry on the activities of the welfare state, the Government of INDIA needs public revenue to spend that money for the public welfare in the form of public expenditure. The Government of India collects taxes to finance its public expenditure. There are different forms of taxes. They can be placed under two broad categories, namely, Direct taxes and Indirect taxes. Direct taxes: When a tax is collected directly from a person who is liable to pay it, it is called a direct tax. Income tax and wealth tax are the taxes which come under this category. In case of direct taxes, the incidence of tax falls directly on the person on whom it is levied. When a tax is levied on the basis of the income of a person, it is called income tax and when it is levied on the basis of the wealth of a person, it is called wealth tax. Indirect taxes when a tax is collected in the first instance from one person who in turn can pass it on to others with whom he engages in transactions, it is called an indirect tax. A sales tax is an example in case. A dealer pays the sales tax when he buys the goods for sale and later he collects it from the customers by adding it to the sale price. The other examples of indirect taxes are customs duty, excise duty, VAT etc. Income tax: The tax liability of a person is assessed on the basis of his/her total income in the previous year relevant to the current assessment year according to the provisions of the Income Tax Law in force in the country at the rates prescribed in the Finance Act for the assessment year.. The tax computed on the total income of a person for the previous year is called income tax. Features of Income tax: 1. It is a direct tax. 2. It is an annual tax. 3. The basis of charge is the Income (See 4) 4. It is levied on total income of a person relating to the previous year. 5. It is levied by the central Government during the relevant assessment year at prescribed rates.

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Liability to Pay Income Tax: Tax cannot be shifted on another person¶s; therefore it is classified as direct Tax. Every person, whose taxable income for the previous year exceeds the minimum taxable limit of income, is liable to pay income tax. The incidence of Income tax depends upon the residential status of an assessee. The components of Income tax law are: 1. Income Tax Act of 1961 as amended to date. 2. Income Tax Rules 1962 as amended to date. 3. Finance Act applicable to the Assessment Year. 4. Circulars, Notifications, Orders and Executive instructions given by the Central Board of Direct Taxes. 5. Judicial decisions.

IMPORTANT DEFINITIONS The definitions of important terms as defined under sections 2 and 3 of the Income the Tax Act 1961 are as under. 1. Assessment Year (Sec.2(9)) Assessment year is a period of twelve months commencing from April 1st of every calendar year and ending on March 31st of next calendar year. Total income of the previous year of an assesses is the following financial year known as assessment year. Tax on total income of a Pearson for the previous year 2008-09 is computed during the Assessment year 2009-10. Thus the assessment year is the financial year immediately following the previous year. The assessment year is the financial year of the Government of India during which income of a person relating to previous year is assessed to tax. Every person who is liable to pay the income tax, files the returns of income by prescribed dates. The income tax Assessing officer processes these returns. This processing involves the determination of the total income and the tax liability, if any, which is called

Assessment. The year in which the whole of the process (filling of returns to passing assessment order) is undertaken is called Assessment Year. 2. Previous Year [section 3] The year in which the income is earned is known as previous year. Pervious year means the financial year immediately preceding the assessment year. Generally,

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previous year begging form April 1,every year and ends on March 31,in the following year. For example the previous year for the assessment year 2009-10 begins form April 1, 2008 and ends on March 31,2009. Cases where the previous year could be a period of less than 12 months The previous year normally consists of a period of 12 months However in the following cases the previous year may not consist of a period of 12 months. 1. Where a new business or profession is set up during the previous year, the previous year for the newly sort up business or profession is the period beginning with the date of commencement of the business or profession up to March 31 of the relevant previous year. 2. where a person great into a new employment during the previous year the previous year for the newly appointed employee is the period beginning with the date of earning of the salary up to March 31of the relevant previous year. Where a new source of income is the period beginning with the date of new sources of income coming into existence up to March 31 of the relevant previous year Cases Illustrated: i. A newly started business in the previous year 2008-09. Mr., Raghuram and Sons started their business on 01-08-2008. As it is a newly started business. The previous year for the business is from 1-08-2008 to 31-32009 (a period of eight months ) for the assessment year 2008-09. ii. A person appointed for the first time in the previous year 2008-09. Y is employee in a factory on 1-7-2008 after completion of his graduation .the previous Year of Y is from 1-07-2008 to31-03-2009 9a period of nine months) for the Assessment Year 2009-10. iii. A new source income has come into existence in the previous year 200810. Nandi leased his land for mining from 1-11-2008 at a royalty of Rs. 100 per tonne of stone raised. The previous year of the new source of income (income from mining) is from 1-11-2008 to 31-3-09 (a period of five months) for the Assessment Year 2009-10.

Y.4 [The students are advised to note that the abbreviation P.. stands for the previous year and A. for the Assessment year] .Y.

there are certain exceptions to this rule. There are cases where the income during the year is assessed to tax in the same year i. the previous year and the assessment year are the same financial. Mr. Following are the important cases where the income is assessed to tax in the same year in which the income is earned.e. a.Y the same year: Generally the income of an assessee during the financial year (called previous year) is assessed to tax in the following financial year (called Assessment Year) it indicates that the previous and the basement year are two separate financial years and the assessment year follows the previous year. However.e. livestock. Income of non-resident from shooing Where a non-resident earns income from shipping business by carrying passengers.7. Income of bodies formed for short duration : Where any association of Persons or body of individuals or an artificial juridical person formed of established or incorporated for a particular event or for some purpose in the assessment year is likely to be dissolved in the same assessment year or immediately after the assessment year. Both P. Income of persons leaving India permanently or for a longer period of time: Where a person decides to leave India during the current assessment year or shortly after its expiry either permanently of for a longer duration. suppose. 2008-09. the total income of the individual from the expiry of the precious year for the current assessment year up to the probable date of his departure from India is charged to tax in the current assessment year. Previous year is the income generating year and the assessment year is the tax assessment year. To illustrate the point. Samarth is leaving India during the assessment year 2009-10 permanently and the probable date of his departure from India is 30-09-2009 up to 30-09-2009 is taxed in the current assessment year 2009-10 along with his income for the previous year.5 Exceptions i. mail or goods at a port in India.5% of the carriage received/receivable by the non-resident owner is treated as his taxable income from business and such income is taxed in the year of earning b. the total income of such assesse for the period from the date of expiry of the previous year for that assessment year up to the date of its dissolution is charged to tax in that assessment year . c. Y and A.

Income of a person who is trying to alienate his assets with a view to avoiding tax Where the Assessing Officer holds that an assesse is likely to transfer his properly to avoid tax. b. 3. A Hindu Undivided Family. 2. for Murali shall be from 1-4-2008 to 31-3-2009.Y. the income such discontinued business from the date of expiry of the previous year for the assessment year up to the date on which the business is discontinued is chargeable to tax. b.3 (31): "Person" includes the following: 1. 2. Person Sec. An association of persons or a body of individuals whether Incorporated or not. . Murali started his business in April 2003. An individual. Solution: a. 5. e. a. the total income of such person for the period from the date of expiry of previous year for the assessment year to the date when the A. 3. for Ganesh shall be from 1-8-2008 to 31-3-2009. 4. c. The P.000.O commences proceeding under section 175. The P.Y. A company. The date of confirmation of service is irrelevant. Following cases.000 p. Illustration 1 State the Previous Year for the Assessment Year 2009-10 in respect of all the.Y. for Raghu shall be from 1-7-2008 to 31-3-2009. Income of a discontinued business: Where the business is discontinued business at any date in the assessment year.m. Ganesh leased/rented a house for residential purpose with effect from 1-82008 a monthly rent of Rs.6 d. A firm. The P. The Profit and Loss Account for the year ending 31-3-2009 showed a profit of Rs. c. Raghu was appointed as a Manager in a Limited Company on 1-7-2008. 70. is chargeable to tax in the assessment year. He was confirmed on 31-12-2009.

. It includes: 1. Vikas Ltd. Assessee (Sec. A company. Every person in respect of who. 7. A Joint family of Manju. An association of persons. 5. any proceeding under the Act has been taken for the assessment of his income or loss or of the income or loss of any other person in respect of which he is assessable or of the amount of refund due to him or to such other person. Manju and their sons Rohil and Rahul. 4. Solution: 1. 4. 2. Every person who is deemed to be an assessee under any provision of this Act. Bhushan and Bhishan are the legal heirs of deceased Bhishma and they carry on his business without entering into partnership. . Jai and Company. Bangalore Municipal Corporation.. 6. 5. A firm. The definition is inclusive and not exhaustive. Illustration 2: Determine the legal status of the following persons: 1. Artificial Juridical Person. A local authority. 3. penalty or interest) is payable under the Income Tax Act. where Jai and Jyothi are partners. 4. and 7. 2. MIs.e. 6. A Hindu Undivided family. 7. Karnataka University.. Every artificial juridical person not failing within any of the preceding categories. A local authority.7 6. Housing Co-Operative Society. Therefore any "Person" not failing in the above mentioned seven categories is also liable to pay tax under section 4. 2. 3. An association of persons. 2(7) "Assessee" means a person by whom income tax or any other sum of money (i. Mrs.

2. Voluntary contributions received by a trust or an institution created wholly or partly for charitable or religious purposes or by an approved scientific . a guardian of a minor. Assessee In default: A person is deemed to be an assessee in default if he fails to fulfill his statutory obligations e g. For example. Dividend. S) from the salaries of his employees and remit the same to the Government and if he fails to do so. 3.  a person in respect of whom any other proceeding is in progress under the Income Tax Act  a person who is identified as deemed to be assessed (also called representatives assessed). . he becomes an assessee in default. From the above definition.resident assessee.8 3.  a person who is liable to pay penalty or interest or any other sum of money. D. and  a person who becomes deemed to be assessee in default under the provisions of the Income Tax Act due to his failure to comply with the statutory duty cast on him under the Act. it can be deduced that the assessee includes  a person who is liable to pay tax. the employer has to deduct tax at source (T. Profits and gains. Income: Income is a periodical monetary return with some sort of regularity. 5. Section (24) defines income to include the following: 1. The rue increase in the amount of wealth over a period of time is regarded as income. on that other person's income is called deemed or representative assessee. an agent of a non. Every person who is deemed to be an assessee in default under any Revision of this Act. Deemed Assessee: A person who is liable to pay tax on behalf of another person.

Any profits on sale of a license granted under the Imports Control Order of 1955. 7. whether convertible into money or not. 4. arising from business or the exercise of profession. salary. . necessarily and exclusively for the performance of his duties. Any sum paid by a company in respect of any obligation which. 9. 12. religious and charitable purposes. The value of any benefit or perquisite obtained from a company by a director or a person having substantial interest in the company or by a relative of a director or a person having substantial interest in the company. commission or remuneration due or received by a partner from the firm. The value of perquisites or profits in lieu of salary taxable under the head salaries. 13. 5. 15. 8. Any sum chargeable to income tax under the head business or profession as compensation or as income of trade or professional association from specific services for its members or as profits chargeable to tax. Any allowance granted to the assessee either to meet his personal expenses at the place where he performs his duties or to compensate him for the increased cost of living. The value of any benefit or perquisite. 10. Any special allowance or benefit specifically granted to the assessee to meet his expenses wholly. Any duty or excise repaid or repayable to any person against exports. The value of any benefit or perquisite obtained by any representative assessee or by any beneficiary. 6. Any cash assistance received or receivable by any person against exports under any scheme of the Government of India. bonus. Any interest. 14.9 research association or by games or sports association or by a charitable fund or institution or by a trust or institution wholly for public. 11. but for such payment would have been payable by the director or the person holding a substantial interest in the company.

Is the periodical additions to the wealth of a person. In short. 16. 3. 20. card games and any other games of any sort. Any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set-up under the Employees State Insurance Act or any other fund for the welfare of the such employees.10 16. The definition of the term income given in the Act is inclusive and not exhaustive. 2. it is to be valued on the basis of the market value. Any capital gains chargeable to tax u/s 45. Therefore the term 'income' includes not only incomes received or incomes accruing . 19. 18. However. races including horse races. crossword puzzles. Principles of Concept of Income: The following are the principles which help us to understand the concept of income and to know what constitutes income. the term income not only includes those things given in Sec. 1. income. it needs to be valued according to the prescribed Income Tax rules. 21. In whatever name It is called. this statement needs to be read in the context of the facts of the individual case. Any winnings from lotteries. Insurance profit computed u/s 44. that is. It means that the income is taxable in the hands of the assessee when such income is either received by him or has accrued to him during the previous year. 17. Income may be received in cash or in kind. the income becomes taxable on deemed basis. 2(24) but also includes such things according to its generally accepted meaning. Therefore. when the income is deemed to be received or deemed to accrue or arise. Any sum received under a Key man Insurance Policy including the sum by way of bonus on such policy. But sometimes. Income arises either on receipt basis or on accrual basis. Where it is received in kind. Where there are no prescribed rules. . Income is a periodical monetary return which arises with some sort of regularity or expected regularity from definite source.

the income is taxable. is taxable. If. both are treated on the same footing. The existence of dispute regarding the title of income does not halt or keep pending the assessment of the income. Income. the income is recipient's income. Therefore. The income tax law does not make distinction between legal income and illegal income. 5. the illegal income is also taxable under the Income Tax Act. if it is required to be applied to discharge an obligation. 8. and it cannot be taxed as income. when it distributes the surplus among its members. 7.) After earning the income. the Income is diverted before it reaches the assessee. Income must come from outside. by obligation. Diversion of income as against the application of income: It Is necessary to understand the terms "diversion of income and application of income". Similarly. When there is diversion of income because of overriding title to the source of income. Thus he cannot make a taxable profit by selling the goods to himself. (Where a person receives income on behalf of another person. The source of income must be external. 6. it is called diversion of income. A person is taxed on what goes into his pocket and not on what saves his pocket. when a mutual concern earns some surplus by overcharging its members (the subscriptions from the members exceed its expenditures). there is no distinction between the permanent and temporary income. From the taxability point of view. such income is not taxable to the extent it is diverted. Mere relief or reimbursement of expenses cannot be treated as income. A person cannot generate income through the transactions with himself. such surplus cannot be considered as income and therefore. it is called application of income. whether permanent or temporary. For the purpose of income tax.11 or arising but also the incomes deemed to be received or deemed to be accruing. 9. 4. . But when there is application of income. What constitutes diversion of income or application of income depends upon the circumstances of the case.

Where a receipt is income and it is not. the income needs to be grossed up and the recipient of the income has to pay tax on the gross income and not on the income received. In the same way. the burden of proof lies upon the assessee. Same income cannot be taxed twice. It is taxable whether it is received in lump sum or in installments. the income does not accrue or arise when there is revaluation of assets. but the assessee seeks exemption. Advance forfeited for breach of contract is not income. Income is not taxable on the basis of its magnitude or frequency. It is important to distinguish between revenue receipt and capital receipt. 11. Where a person receives tax-free income on which the person paying the income has paid tax on behalf of the recipient. 13. Income does not come from mere production of a commodity. Pin money received by wife for her personal requirements and the amount saved out of the money received from her husband for house hold expenses is not treated as her income. 19. . The burden of proof: Where a receipt. which is not in normal course treated as income. is sought to be taxed. 17. in normal course. Losses represent minus income 14. 16. 20. the Department has to prove that the receipt is a taxable Income. 18. If a receipt is not treated as income originally. Devaluation of currency extra money received on devaluation of currency is treated as income and it is taxable. Income does not arise in a transaction between the head office and branch office even if the goods are invoiced at a price higher than the cost price. it cannot be subsequently treated as income. Income includes loss. 12. for the advance money when received first was not in the nature of income. A revenue receipt is taxable as income unless it is expressly exempt under the Act while the capital receipt is exempt unless it is expressly taxable. 21.12 10. Income should be real and not fictional. Income of previous year is taxable in the hands of a person even when the Source does not exist during the assessment year. 15. an exempted income.

Income from Capital gains. In other words. Tainted or illegal income is also taxable under the Income Tax Act.00.he received the following incomes: a. Income from house property e.20. house property. Rent of Rs.1. Illustration 3: Anil is working as a lecturer in a commerce College. During the P. He sold a Building and earned a profit of Rs.00. d. He is also a share broker and earned RS. Capital gains 7.000 as examination remuneration from the University. Income from house property.3. Salary of RS. 5.000 from his employer: b. Y . Answer: a.5 of the income Tax Act. Gross Total Income: It is the sum total of incomes under five different heads of income computed as per I T provisions. who is not an employer. (i) (ii) (iii) (iv) (v) Income from Salaries.000.OOOreceived by letting the house owned by him. Income from salary b.1 . Income of a person is computed under the following heads.000 Classify the above incomes under various heads of income. . Heads of Income: As per Sec.13 Tainted Income: Income earned through an illegal business or profession or activity is called tainted Income. Income from other sources. Income from business or profession d. Rs. c. when the incomes from salary. Income from other sources c. e. 6. Profits and gains of business of profession.00.

Agriculture Income 10(1) 10(1) 2. What income is exempted under section 10 Income is exempt from tax . are casual incomes. Total Income Sec. are added up. 1. as it does not from part of total income. cross word puzzles. card games.14 business or profession. It is in the nature of an unexpected wind fall profit. . 13 and 13A deal with income which does not From part of an assessee's total income.10(2) 10(2) 3. 10M.10(2A) 10(2A) 4. It is an income by chance factor. 9. the receipt of casual income is accidental and without any stipulation. capital gains and other sources. 8. payments received from family income by a member of a HUF . gambling. the aggregate is called Gross Total Income. Set -off of losses is not allowed. Some Casual incomes are subject to Tax Deduction at Source. Share of profit from a firm. In other words. Interest received by a non-resident from prescribed securities 10(4) 10(4) 5. 1 DB. race. 2(45): Total income of an assessee means the gross total income as reduced by the amount permissible as deduction under Sections 80C to 80U. betting etc. Some important provisions relating to casual income are as follows: (i) (ii) (iii) Expenses are not deductible from the casual income. computed in accordance with the provisions of Income Tax Act. Interest received by a person who is resident outside India on 10(4) amounts credited in the ³Non-resident (External) Account´10(4) . While section 10 appends a list of income from tax. 11. Casual Income: These are incomes earned casually during the financial year without any effort. Example: Winnings from lottery. 10A. It is the taxable income on which the tax is calculated at prescribed rates. 12. and 1 DBA. INCOME THAT IS EXMPT FROM TAX Sections 10..

Remuneration/fees received by non-resident consultant and their 10(8) foreign employees. Commuted value of pension and any payment received by way 10(10A) of commutation of pension by an individual out of annuity plan of LlC or any other insurer from a fund set up by that corporation or insurer 16. Remuneration received by foreign diplomats of all categories 10(6) JO(6) 8.10(6A) 10(6A) 11. Compensation received by victims of Bhopal gas leak disaster 10(10AA) 10(1013) 10(10B13) 19. Retrenchment compensation 18. Leave travel concession provided by an employer to his Indian 10(5) 10(5) 7. Leave salary 17. Salary received by a foreign citizen as an employee of a foreign 10(6) 10(6) enterprise provided his stay in India does not exceed (VI) 90days (VI) 9. Foreign allowance granted by the Government of India to its 10(7) employment 12. Salary received by a non-resident foreign citizen as a member of 10(6) 10(6) ship's crew provided his total stay in India does not (viii) exceed 90days (viii) 10. Death-cum-retirement gratuity 10(10) 15. Tax paid on behalf of foreign companies . Remuneration/fees received by non-resident consultants and 10(8A) their foreign employees 14.15 6. Remuneration received from a foreign And Government by an individual who is in India in connection with (9) any sponsored co-operative technical assistance programmed with a foreign Government and the income of the family members of such employee (9) 13. Compensation from the Central Government or a State 10(10BC) Government or a local authority received by an individual or his legal heir on account of any disaster .

and any other allowance subject to certain conditions 30. House rent allowance subject to certain limits 26. the weak and the ailing. Any amount from provident fund paid to retiring employee 10(11) 24. Any income received by any person on behalf of any 10(23AA) Regimental Fund or non-public fund established by the armed . 10(17A) scientific or artistic work or attainment or for service for alleviating the distress of the poor. Compensation received from a public sector company at the 10(10C) time of volunteer retirement 21. or for proficiency in sports and games or gallantry awards approved by the Government 31. income received for rendering any specific services and income by way of interest or dividends) of approved professional bodies 37. Daily allowance of a Member of Parliament or State Legislature 10(17) (entire amount is exempt). Pension and family pension of gallantry award winners 32. Rewards given by the Central or State Government for literary. Tax on perquisite paid by employer 10(10CC) 22. National property income of anyone palace occupied by a 10(19A) former 34. Any income (other than interest on securities. Any sum (including bonus) on life insurance policy (not being a 10(10D) Key man insurance policy) 23. amount from an approved superannuation fund to legal heirs of 10(13) the employee 25. Any income of an approved scientific research association 10(20) 10(21) 36. Family pension received by family members of armed forces 10(18) 10(19) 33. Interest from certain exempted securities ± 28. Income of local authorities 35.16 20. Special allowance granted to an employee ± 27. Scholarship granted to meet the cost of education ± 10(3A) 10(14) 10(15) 10(16) 29. income from 10(23A) property.

approved superannuation fund. any income by any of dividend or long-term capital gain of 10(23FA) venture capital fund undertaking 45. Income of an agricultural produce market committee or board 10(26AAB) constituted for the purpose of regulating the marketing of agricultural produce (applicable from the assessment year 200910) . Income of a minor child up to Rs.500 in respect of each 10(32) minor child whose income is includible under section 64(1A) 50. recognized provident fund. Income of Employees' State Insurance Fund 10(25A) 47. Capital gains on transfer of listed equity shares ± 10(33) 10(34) 10(35) 10(36) 54. Income of investor projection fund 42. Income of Credit Guarantee Funds Trust for Small Industries 10(23D) 10(23EA) 10(23EB) 43. approved gratuity fund and approved coalmines provident fund 46. Income of Mutual Fund set up by a public sector bank or public 41. 2003 53. any income received by a person on behalf of statutory 10(25) provident fund. Interest on units of a Mutual Fund on or after April I. Income of Investor Protection Fund by way of contributions 10(23EC) from commodity exchange and the members thereof (applicable from the assessment year (2008-09) 44. Subsidy received by planters 10(31) 49. Dividend on or after April I. Any income of the pension fund set up by LlC or any other 10(23AAB) insurer approved by the Controller of Insurance or Insurance Regulatory and Development Authority 40. Long-term capital gains on transfer of securities not chargeable 10(38) to tax in case covered by transaction tax- . 1. 2003 from domestic companies 52. Income of funds established for the welfare of employees 10(23AAA) 39. 48. Capital gains on transfer of US 64 51.17 forces of the Union for the welfare of the past and present members of such forces or their dependents 38.

. Capital gain in the above case 10(39) 10(40) 10(41) 58.18 55. Any amount received by an individual as a loan (either in lump 10(43) sum or installment) in a transaction of reverse mortgage- Note: The exempted incomes are discussed in detail at their respective head of income. Income of an international sporting event 56. Grant received by subsidiary company from holding company 57.

The residential status has nothing to do with the citizenship of a person. 6): Residential Status (on the basis of Basic conditions) Resident Non-Resident (on the basis of additional conditions) Ordinarily Resident Resident but Not ordinarily Resident In India India . The residential status of an assessee is determined with reference to his residence (stay or physical presence) in India during the previous year. Types of Residential status (Sec.19 Chapter II RESIDENTIAL STATUS Introduction The computation of total income of a person and incidence of tax depends on his residential status. To determine the taxable income of a person the residential status is required to be determined for each assessment year.

b. Let us discuss them in detail: Basic conditions: There are two basic conditions and they are as follows: (a)An Individual has been in India for 182 days or more during the P. Additional Conditions: There are two additional conditions and they are as follows: a. In other words basic condition "b" referred above is not applicable for such individuals mentioned above. Basic conditions and 2.20 1. during 7 years immediately proceeding the relevant previous year. He has been in India for at least 730 days or more. or (b)An individual has been in India for 60 days or more during the previous year and 365 days or more during 4 years proceeding the relevant previous year. He has been Resident in India for at least 2 out of 10 years immediately preceding the relevant previous year and. is extended t0182 days or more in India during the previous year. Exceptions to the above basic condition (b): i. In case of an Indian citizen who leaves India during the previous year for the purpose of employment or as a member of crew of an Indian ship or. A person of Indian origin means himself or anyone of his parents or anyone of his grandparents should have been born in India or undivided India. the presence of 60 days required.Y. ii. RULES FOR DETERMINING RESIDENTIAL STATUS OF INDIVIDUALS There are two conditions to determine the residential status of an individual 1. Important points to be considered while calculating no of days for the residential status of an individual are as follows: . Additional conditions. In case of an Indian citizen or a person of Indian origin who comes on a visit to India during the previous year.

Additional conditions are Immaterial Illustration. Rules for determining the residential status are stated below. Not Ordinary Resident Must satisfy at least one the basic conditions and none or one of the additional Non Resident None of the basic conditions are satisfied So the conditions. Nonresident: If an individual does Not satisfy anyone of the basic conditions. Resident and Ordinarily Resident :if an individual satisfies anyone of the basic conditions and fulfils both the additional conditions. 2.e.both days are inclusive. Resident but Not ordinarily resident-After satisfying one or both of the basic conditions if an individual satisfies one or none of the additional conditions then he is said to be resident but not ordinarily a resident. 0.S. 3. When an Individual Is said to be : 1. Sundays and holidays are inclusive. at Zero hours. then he is said to be Ordinary resident 2. 4. The stay need not be continuous during the previous year.0001 is also taken as one day. 1: Sridhar left India for the first time on 20 may. He came back to India only on 15 February 2009.e. 3. then he is said to be Non .21 1. 2006 to U. The stay may be at any place or places in India.A.01 i. Day starts from midnight 12. 5. 6.Any fraction of a minute is also treated as one day i.V 2009 -10 . Ordinary Resident Must satisfy at least one of the basic conditions and both the additional conditions . Determine the residential status for the A. The day of leaving and arriving to India .resident.

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Solution: The Residential status of Sridhar is Non-resident In India for the A.Y. 2009 10. Sridhar stays in India only for 45 days Le. from 15-02-2009 to 31-03-2009 during the P.Y.2008- 09. So he fails to satisfy any of the basic conditions (i.e. 182 days or 60 days and 365 days in preceding 4 years). Therefore, he is a Non-resident in India. Once an individual does not satisfy any of the basic conditions, the question of additional condition is irrelevant. Illustration .2 : Suresh is a medical practitioner. He comes to India for the first time on 20th April 2006. He went to U.S.A. on 6 October, 2008. While he was in India he stayed at Delhi up to August 2008 and thereafter stayed at a Hotel In Bangalore, till his departure from India. Determine his residential status for the A.V. 2009 -10. Solution: The residential status of Suresh is not ordinarily resident in India for the A.Y. 2009 - 10. 1. Basic condition (a) satisfied: During the P.Y.2008 - 09 Suresh was in India for 189 days (Le. April 30 + May 31+ June 30 +July 31 + Aug.31+Sept+30+0ct 6 days.) So he satisfies the first basic condition of 182 days presence in India during P.Y. 2008 - 09. Thus he is a resident. 2. Additional conditions: I) First additional condition satisfied: .Suresh came to India for the first time on 20th April 2006 and went to U.S.A. on 6'" October 2009. He was in India for 346 days in P.Y. 2006-07(Le. from 20. 4 2006 to 31.3 2007) and 365 days in P Y 2007 -08 (Le from1.4.2006 to 31 .32008). So his residential status in both P.Ys. i.e. 2006-07 and 2007-08 is Resident(as he stayed for more than 182 days and thus satisfies first basic condition) Thus, he satisfies first additional condition i.e. "resident" in India at least for 2 years out of 10 years preceding the relevant previous year.

II)The second additional condition not satisfied:.

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He stayed in India only for 711 days i.e. 20-04-2006 to 6.10.2008 (346 days in P.Y. 2006 07 + 365 days in P.Y.2007 - 08 respectively). So he fails to satisfy second additional conditions.

Conclusion: Suresh, an Individual, satisfies first basic condition but does satisfy both the additional conditions. Hence, he is Resident but Not ordinary Resident for the A.Y. 2009 - 10. Note: In order to. determine the residential status, the stay in India may piecemeal. It means that it is not necessary that a person should stay in India stretch or at the same place in India. Therefore, stay in Delhi or stay in Bangalore irrelevant but what matters is stay in India

Illustration 3 : Felix, German national came to India for the first time in the last 25 years 21st March, 2008. On 28th September 2008, he left India to Singapore on a business trip. Again he came back to India on 20th Feb. 2009. Determine the residential start of Felix for A.Y. 2009 - 10.

Solution: The residential status of Felix is "Not ordinarily Resident" in India for the A 2009 - 10. 1. Basic condition (a) is satisfied: Felix stayed in India for a period of 2 days( I.e. April 30 +May 31+june 30 + July 31 + August 31 +September 28 in 2008 as in 2009 Feb.10 + March 31days. during the P.Y.2008 - 09 Thus, he satisfies the find basic condition of 182 or more days stay in India. 2. Additional conditions: He is unable to satisfy both the additional conditions as he comes to India for the first time on 21st March, 2008 during the P.Y.2007 - 08.

Illustration 4 : Jermy Nova, a foreign citizen comes to India for the first time on April 25, 20 and purchased a residential house in Mumbai During the previous year¶s 2004 ± 05 2005 - 06, 2006 -07 & 2007 - 08 he ~s in India for 125 days, 85 days, 9 days and 2

24

days respectively. He left India on 3 June 2008 but maintained his house at Mumbai Determine the residential status of Jermy Nova for the A. Y. 2009 - 10.

Solution: The residential status of Jermy Nova is "Not ordinarily resident in India" for the A.Y. 2009 - 10. 1. Basic condition (b) is satisfied During the P.Y 2008 - 09 Jermy Nova stays in India for a period of 64 days from 1 April, 2008 to 3 June 2008.( i.e. Apr 30 May 31 + June :3days). His total stay during 4 years immediately preceding previous; years 2004 - 045 to 2007 - 08 in India is for a period of 433 days (125+85+09+211 days). Thus satisfies second basic condition He, therefore becomes resident in India. 2. Additional conditions: During 10 years preceding the P.Y.2009 - 09 he wil1 resident only in 2007-08 as he satisfies first basic condition(Le. stayed for more that 182 days) During 7 previous years preceding the P.Y.2008 - 09 his total stay is only for 433 days(L e. 125 + 85 + 9 +214). Thus, he does not satisfy both the additional conditions. He is therefore Not ordinarily Resident in India for the A.Y. 2009 10. Note: It is to be noted that maintaining a dwelling house in India is not relevant. Physical presence of a person is only considered in determining the residential status.

Illustration.. 5: Purushottam, an Indian citizen, leaves India on 1 May 2005 to Europe and came back to India after two years on 1 may 2007. Again he left India on 1 June 2008 to Japan and returned to India on 1 January 2009. Determine the residential status of Purushottam for the A Y. 2009 ± 10 Solution: The Residential status of Purushottam is Ordinarily Resident in India for the A.Y. 2009-10. 1. Basic condition (b) satisfied:

in PY 2005 . He is resident in at least two previous years and also he fulfills the requirement of 730 days stay in India in seven preceding previous years. 2. and in 2009 Jan 31 +Feb 28 + mar 31days ) I. Basic condition (b) satisfied: During the P. 2009 . his status is Ordinarily Resident in India.[2004-05 -365 days.Y.Y. more than 60 days and 731 days in last 4 P.2008 . Solution: Sweety is "Ordinarily Resident of India" for the AY.25 During the P.10.e. Her presence in India during other previous year was as follows :- Year 1998-99 1999-00 2000-01 2001-02 2002-03 Days 65 180 360 16 360 Year 2003-04 2004-05 2005-06 2006-07 2007-08 Days 181 305 65 10 126 Determine the residential status for the AY. more than 365 days in 4 previous years preceding the P. 2008 -09.2008 .Y. Illustration 6 : Sweety is a foreign citizen. So he is Resident. As he is an Indian citizen it is implied that he was in India in remaining 8 previous years.Ys.2005-06 from 1-04-2005 to 105-2005 = 31 days.2008 . Both Additional conditions sat isfied: During last 10 previous years starting from 1998-99 he went abroad for two years starting from 1-05-2005(i.07 (whole year he was at Europe)=NiIdays. 1.e. Thus he satisfies both the additional conditions.06 and PY 2006 -07). Hence.09 Purushottam stays in India for 152 days( Le in 2008 April 30 + May 31 +June1. During the P.e.Y.2006 .09 she stayed in India for 85 days and in 4 years preceding the .09 she comes to India for 85 days. 2007-08 from 1-05-2007 to 31-03-2008 = 335 days] I.10. 2009 . Thus he satisfies second basic condition.

2008 .from2004 .05 to 2007 . . So she is Resident.08 she stayed in India 305 +65 + 10 + 126 days respectively totaling 506days). more than 730 days from 2001 . Thus.Ys during last 10 years. she satisfies second basic condition. Both Additional conditions Sat isfied: Her residential status is "Resident' in more than two P.e.Y. in 2000 .08(16+ 360+ 181+ 305+ 65 + 10+ 126days= 1063 days). 2. Similarly her total stay in India during 7 immediately preceding previous years is 1063 days (i.e. Hence Sweety is Ordinarily Resident In India.26 P.2002 to 2007 . Thus both the additional conditions are satisfied.01 and in 2004 ± 05 she stayed in India for more than 182 days respectively and thereby satisfies first basic condition and therefore "Resident" in these years. For instance.09 her stay is for more than 365 days ( i.

In case of an Indian citizen. from 1-04-2008 to 20-09-2008 (Apr 30 + May 31 +Jun 30 +Jul 31 +Aug 31 Sep 20 days) So he fails to satisfy the first basic condition.092008 and not returned to India till 31-03-2009. 7 (based on Individual who leaves India for employment) Nagapathi is a citizen of India. 8 : (Based on assessee on visit to India) Negara is a citizen of India but renders service in Iran.09 Nagaraj stays in India only for 150 days (i.10 is "Non Resident In India". Illustration.2008 . State the Residential status of Nagapathi for the AY. Basic condition (a) is not satisfied and basic condition (b) is practically not applicable as he comes to India on a visit: During the P. 2009 .Y.Y.27 Illustration.09 Nagapathi stayed for 173 days Le.2008 . He returned to India on 1-05-2008.e. The second basic condition is not to be tested because if a person of Indian origin if he leaves India for employment 182 days stay is required instead of 60 days as specified under second basic condition ( refer exceptions) When basic condition is not satisfied additional conditions become irrelevant. Conclusion: Mr. 2009 . Note: Date of leaving is inclusive for calculating number of days. who comes on a visit to India from abroad only first basic condition is to be satisfied and the second one is not practically applicable as per the exceptions. For employment he left to Germany on 20.Thus. failed to satisfy the first basic condition. Additional conditions: If the basic condition is not fulfilled the fulfillment of additional conditions is immaterial. Determine the Residential status for the A.10. Solution: 1.Y. Conclusion: The residential status of Nagapathi for the A. Residential Status & Incidence of Tax 72 2. 2009 -10. But again he went back to Iran on 27-09-2008.May 31 + Jun 30 + Jul 31 + Aug 31 and Sep 27 days). .Y. Solution: Basic condition (a) Is not satisfied and basic condition (b) Is practically not applicable as he left India for employment: During the P. Nagaraj is Non-Resident for the AY. 2009 -10.

9 : Peterson is a foreign citizen.( Every year he satisfies second basic conditions Le. concerned and more than 365 days in 4 preceding previous years concerned). Thus satisfies first additional condition. Hence. Since 1990 he visits India every year in the month of October and stays for 100 days.Y. But in 7 preceding previous years relevant to P.Y.09 Peterson stays in India for 100 days and his total stay in preceding 4 previous years is 400 days at the rate of 100 days every year. So he fulfills second basic condition. It may be shown as under: Residential Status Hindu Undivided Family (on the basis of Control and Management ) Resident Non-Resident (on the basis of Karta stay in India) Ordinarily Resident Resident but Not ordinarily Resident ..Y.10 1. 6(2): An HUF may be like individual Ordinarily Resident. Additional conditions: He is "Resident" in at least 2 out of 10 preceding previous years. or Resident but not ordinarily Resident or Non-resident. Thus he is "Resident in India".28 Illustration. 2009 . does not satisfy second additional condition.Y. Find out the residential status for the AY. 2. RESIDENTIAL STATUS OF HINDU UNDIVIDED FAMILY Sec.09 in his total stay is only for 700 days at the rate of 100 days per previous year.2008 . II. 2009 ± 10 Solution: Peterson is "Not ordinarily Resident" for the A.2008 . After satisfying one of the basic conditions if both the additional conditions are not satisfied an individual is treated as "Not ordinarily Resident in India". more than 60 days stay in India during P. Basic condition (b) satisfied: During the P. 2.

HUF is Ordinarily Resident in India.29 RULES FOR DETERMINING RESIDENTIAL STTUS OF HUF Basic Condition: -The Control and management of the affairs of HUF must be wholly or partly in India. (b) Karta has been present in India for a period of 730 days in 7 previous years immediately proceeding the previous year. So it is "Resident in India". 10 : Shantharam of Haveri is the Karta of HUF. Solution: The HUF is "Not ordinarily Resident in India for the AY. Control and management is said to be situated in a place where directing power is situated and decision making function is performed. He usually stays in India only for 100 days every year since 1982 and for the remaining part of the year he stays in Nepal. Basic conditions: The control and management of the affairs of the HUF is partly situated in Haveri. To decide whether it is Ordinarily Resident or Not Ordinarily resident in India one has to apply the additional conditions concerned with Karta's stay in India:(a) Karta has been Resident in India in at least 2 out of 10 previous years immediately preceding relevant previous year. The affairs of the HUF is partly managed from Haveri and partly managed from Nepal. Additional Conditions: Once an HUF satisfies basic condition it becomes Resident. 2009 -10. otherwise it is "Not Ordinarily Resident' in India. If HUF satisfies the basic condition it is "Resident in India" otherwise treated as NonResident in India. If Karta of the HUF satisfies both the additional conditions.2009.10. Thus HUF satisfies the basic condition. India. Determine the residential status of the HUF for the A. Additional conditions: . It should be noted that the additional conditions can be fulfilled only in the individual capacity of Karta. Illustration. 1.Y. 2.

10.2002 to 2007 . India so he satisfies second basic condition every year Le. 2009 . So it is Resident in India. The status is determined on the basis of the place from where control and management is exercised by the partners of the firm or principal .Y. 3.He manages the HUF partly from Gulburga and partly from Shrilanka.09 and there by fails to satisfy second additional condition.Y.09 the control and management of the affairs of the HUF is exercised partly in India by Kartha from Gulgurga. RULES FOR DETERMINING RESIDENTIAL STATUS OF FIRM AND SSOCIATIONS[Sec. 2009 .30 To determine whether it is Ordinarily resident or Not Ordinarily resident.2008 . Hence HUF satisfies the basic condition. So HUF is treated as Not Ordinarily Resident in India for the AY. 3. Thus. Illustration. one has to test additional conditions on the Karta in his individual capacity.09 is Not Ordinarily resident. is Not Ordinarily resident in India for the A. 2009 -10. But his stay in India is only for 700 days(@ 100 days per year from 2001 . he satisfies first additional condition.6(2)] A firm or an association of persons can be either resident or Non-resident in the relevant A previous Year.08) in 7 years preceding the P. It is because he failed to satisfy both the additional conditions as an individual. 2009 -10 Solution: The residential status of HUF Is Not Ordinarily resident In India. 60 days during the relevant PY and 365 days in last 4 years). Thus. the HUF is Not Ordinarily resident in India for the AY.Y. Conclusion: HUF satisfies the basic condition but fails to satisfy both the additional conditions.10. Since he is resident in more than 2 years out of 10 years ( he stays every year for 100 days in. Karta Mohan's residential status for the P.2008 . Determine the residential status of HUF for the AY.Y. 11: Mohan of Gulburga is the Karta of an HUF. For the AY. 2009 . But the status of Mohan.10. During the P.2008 .

3) The rules are as follows: 1. Firm. The Residential status is Resident in India if the control and management of the firm/association of persons is situated wholly or partly in India. Resident :Every other person is resident in India if control and management of his affairs are wholly or partly situated within India during the relevant previous year. individual. Therefore we have to determine the residential status of a person in India.e. 2. 6(4)] In case of every other person there are two type of residence:1. Need to determine Residential Status? The total income of an assessee varies according to h residential status in is India. HUF. RULESFOR DETERMINING RESIDENTIAL STATUS OF COMPANY (Sec. Non-resident :Every other person is Non-resident in India if control and management of his affairs are wholly situated outside India. b. So to determine the status one has to apply the rules stated below: as 1. The Residential status is Non-resident in India if the control and management of the firm/association of persons is situated wholly outside India. 4.31 officer in case of association of persons. 2. Association of persons. A foreign company is Resident in India if its control and management is situated wholly in India. An Indian company (Domestic Company) is always a Resident in India. 2. The Indian income as well as Foreign income of a person (i. . company or every other person) is liable to tax if the status is ordinarily resident in India during the relevant previous year. A foreign company is Non-resident in India if its control and management is wholly or partly situated outside India. 5. a. But a non-resident in India is liable to pay tax only on Indian income and he is not liable to pay tax on foreign income. So also the incidence of tax shall vary according to residential status. RULES FOR DETERMINING RESIDENTIAL STATUS OF EVERY OTHER PERSON [Sec.

the scope of the total income is based upon the residential status of the assessee. While dealing with the scope of total Income.32 Under the Income Tax Act. . the incidence of tax on the taxpayer depends on his residential status. the incomes can be categorized as Indian incomes and foreign incomes. In other words.

If the receipt of income. It is not deemed to be received in India. actual or deemed. happens In India. Examples of exempted income are: Indian Agricultural income. etc.33 Status of the income Indian Income: The following are the Indian incomes: a. d. Share of income received from HUF. Income on units of UTI or other mutual funds. accrual may also be actual accrual or deemed accrual. a foreign income is the income which is neither received (nor deem to be received) in India nor accruing/arising (or deemed to be accruing/arising) India. c. Interest on Post office savings bank a/c. It is not accruing or arising in India. Income accruing or arising in India but received outside India. the income is called Indian income. Dividend from Indian companies. Income received in India and also accruing or arising in India during the previous year. It may be an Indian income or a foreign income. Foreign income: Any income which satisfies all the following conditions is called foreign income. a. d. It is place of receipt of income and accrual of income that decides the status Income. If anyone of the above conditions is not satisfied. b. It is not deemed to be accruing or arising in India. Exempted incomes: The exempted incomes are the incomes which are not taxable in the hands of the assessee. Receipt of income may be actual receipt and likewise. actual or deemed or the accrual of income. It is not received in India. Any income exempted under the Income Tax is not to be considered for computing taxable total income of assessee. . it is not a foreign income Therefore.. c. b. Income deemed to be received in India and also accruing or arising in India during the previous year. Income deemed to be accruing or arising in India but received outside India.

Income received and accrued or arisen outside India from a business controlled from or profession set up in India 6. Income accrued or earned in India 4. Indian Income (All are Taxable) 1. Income deemed to be received in India 3. Foreign Income 5. individual. Incidence of tax on Not ordinarily Resident in India: This status can be seen only in case of individuals and HUFs. Association of persons. company or even other person) during the previous year is taxable in the hands of a person who is a resident in India (an ordinarily resident in case of individuals and HUFs). Firm.No Income Ordinary Resident Not Ordinary Resident A. he is not liable to pay tax on foreign income.e. Incidence of tax on Nonresident: A non-resident in India is liable to pay ton Indian income. HUF. Income received in India 2.34 The incidence of tax on different persons having different residential stat can be explained as follows: Incidence of tax on Resident (Ordinarily resident in India in case of individuals and HUFs): The Indian income as well as Foreign income of a person (i. Income deemed to be accrued or earned in India B. Income received and accrued or arisen from a business controlled or profession set Yes No No Yes Yes No Yes Yes Yes NonResident Yes Yes Yes Yes Yes Yes Yes Yes Yes . any foreign income connected with business controlled from India profession set up in India is also taxable in the hands of Not ordinarily resident India. The following table highlights the tax liability in brief: S. However. In this case all Indian incomes are taxable In addition.

. The income may be received either by the assessee or by any other person on behalf of him or by book adjustments. Past untaxed foreign income brought Into India during the P.Y. Following are the incomes deemed to be received in India as per the Act. For example. HP. b) value of free accommodation provided to an employee is a receipt in kind. a. All second and subsequent receipts are outside the preview of "received" and they are called remittances or transmission of income. Exempted incomes No No No No No No Yes No No Phraseology explained 1. Income may be received in cash or kind. Income received and accrued or arisen outside India in earlier years but later on remitted to India D. Interest credited to Recognized Provident Fund account. They are deemed receipts in the previous year. b. Income deemed to be received: Sometimes the income will not be received actually but in the eyes of the Income Tax Act of 1961. An income cannot be received more than once. certain incomes are treated as received. a) crediting the income directly to the bank account is treated as "Received" but after receiving the income in cash and then credited to bank account is not received. 2. The place of receipt shall be the place where it is received for the first time. 7.35 up outside India. Income received and accrued or arisen from any other source (salary. All incomes received in India are taxable irrespective of their residential status. Income Received: The term received means receipt of income for the first time. Contribution by the employer to the Employee's Recognized Provident Fund in excess of 12% of salary. Capital gain and other sources) outside India C.

the Government or b. Pension from an Indian employer received outside India) vi. e. Income from any property. asset or source of income in India. Capital gain on transfer of a capital asset situated in India. . 3. When the right to receive becomes vested in the assessee. Income from salary chargeable under the head 'Salaries' for services rendered in India. a resident in India (if such interest is not payable in respect of any debt or borrowings and used for the purpose of business or profession carried on by him outside India or for earning income from any other source outside India) or a non-resident in India ( if such interest is . To accrue or arise means a right to receive. the income is said to accrue or arise in India. 4. v. Following incomes are deemed to accrue or arise in India: i. Contribution by Central Government to the account of an employee under a pension scheme referred under section 8DCCD. Income from business connection in India subject to conditions. Income Accrued or Arising: Income accrued or arising in India is Indian income and it is taxable irrespective of residential status. there are some incomes which though do not accrue or arise in India. Income by way of interest payable by: a.9 of the Income Tax Act. Deemed profit referred under section 41 of the Act. But under Sec. iv. vii. ii. Income deemed to accrue or arise: Sometimes incomes do not actually accrue or arise in India. Provident Fund to Recognized Provident Fund in the previous year.( For example. d. Transferred balance of an Unrecognized.36 c. Salary payable by the Government of India to an Indian citizen for the services rendered outside India. Dividend paid by an Indian company. iii. are treated as having accrued or arisen in India: Such incomes are called' deemed to accrue or arise in India 'and are taxable irrespective residential status of the assessee.

3.30. b.000. 00. an assessee submits the following details of his income for the p.OOO. Not ordinarily resident . Past untaxed profit from London remitted to India Rs.1 2008 . a resident in India. a non-resident in India (if such fees are payable in respect of services used in a business or profession carried on by him in India or for earning income from any source in India). a resident in India (if such fees are not payable in respect of services utilized in a business or profession carried on by him outside India or for earning income from any source outside India). 1. 5.09 . a non-resident in India( if such interest is payable in respect of any debt or borrowings and used for the purpose of business or profession carried on by him in India) . Income by way of royalty payable by: a. Illustration. Resident b. 6. Income received on units of UTI Rs.5.6.50. Income by way of fees for technical services payable by' a. Interest received from Government of India (it is paid to him in Shrilanka) As. Salary received in London for services rendered in Karnataka As. Shri: Malipatil. (a foreign company which is non-resident) outside India (for a business situated outside India) As.000 Compute the total income if Malipatil is : a.000.000.1. the Government. viii.(if such interest is not payable in respect of any debt or borrowings and used for the purpose of business or profession carried on by him outside India or for earning income from any other source outside India )or c.OOO.60.y. 4.37 payable in respect of any debt or borrowings and used for the purpose of business or profession carried on by him in India). c. 12. 20. Royalty received from A Ltd.. xi. the Government or b. Capital gain on sale of house property in Pune but the sales consideration received in Nepal As.

000 NonResident .70. 3.70. So it is an Indian Income taxable to all.000 7.000 6. So it is a foreign income.000 6. Solution: S.000 India (it is paid to him in Shrilanka) B. 2. Foreign Income 3.20. Hence.00.000 ------------------50.000 ------------------------------------------------------60. (a foreign company Which is nonresident) outside India (for a business Situated outside India) Capes untaxed 5. Indian income because interest is received from Government of India. Indian Income 1.000 50. Interest received from Government of 50.000 6.Y.000 1. House property is situated in India.000 services rendered In Karnataka 4. Service is rendered in India. 5. 2009 .. So it is an Indian income taxable to all.20.000 7.00. Capital gain on the sale of house property in Pune.38 c.Aoyalty Income is received & accrued outside India. Salary received in London for the 1. 8. Royalty received from "A" Ltd.30.20.No Income Ordinary Resident Not Ordinary Resident A. but the sale consideration received in Nepal 2.000 1. 4.10. Exempted Income Income on units of UTI Total Notes: 1. it is taxable only in case of ordinarily resident.profit from London remitted to India set up in India D.00. Remittances of past untaxed income do not amount to "receipt' of income. Non-resident for the A.

1. Income from Agriculture in Hubli As. Non .resident India .00..09 . (But it is received in Australia) 6. Not . 1. Profits of business established in Iran deposited in a bank there Rs.Y. Profit earned from business in Kanpur As. Income from salary received from X Ltd.S.40. Income from house property in Shrilanka received in India As.Y. at Delhi Rs. Income on units of UTI is an exempted income and nobody is taxed.000 4. 2009 .39 Hence not taxable and also it is not the income of the previous year. Profit from business in Iraq (1/2 received in India) AS.1.Ordinarily resident c.) 8.1.20.2.00O is brought into India and this business is Controlled from India.00. Royalty received by him in U.000.10 if Krishna Prasad is: a.000 9.000.000 10.1. 90.A. Income from house property in Japan deposited in a bank there Rs. Income from agriculture in Germany RS. Past untaxed foreign income brought into India during the Previous2007 ± 08 Rs.00.000 7.OO.000 3. 15. 2008 .00.000 Compute the total income for the A. Illustration. RS.1. 13 : Following are the incomes of Krishna Prasad for the P. Income from cotton business in Chennai As.000 (it is all spent there for education.60. 6.OOO(out of his.) 5.00 2.50. Resident b.00. 50.00 11. from the Government of India Rs.

000 ------------ ------------ 3 4 50.000 1. received in India Foreign Income Income earned and received outside India Profit from business in Iraq (remaining half is Foreign Income.1.000 50.00.Y.000 ------------ ----------------------- ----------------------- D 11 ------------ ------------ ------------ Total 9..000 50.000 Note: i.No.000 90.10.000 60.000 60.00. Profits of business established in Iran deposited in a bank there ± Business .000 1. 6 Indian Income Profit earned from business in Kanpur.20. 50.000 1 50.000 -----------2.) Income from house property in Japan deposited in a bank there Profits of business established in Iran deposited in a bank there ± Business being controlled from India.007-08 Exempted Income Agricultural income from Hubli 1. (see notes) Income from agriculture in Germany Past untaxed foreign Income brought into India during the P.00.10.10.2009-10.000 5.00.40 Solution: Computation of Total Income of Krishna Prasad for the A.00..20.000 x 1/2) Income from house property in Sri Lanka .000 90. at Delhi Income from cotton business in Chennai Royalty received by him in U. 9 5 8 Income from salary received from X Ltd.000 90. Profit from business in Iraq (half received in India.000 60.000 1. Income Ordinary Resident Not Ordinary Resident A.20.S. from Government of India.Y.A.000 50.000 2.000 7.000 50.000 50. S.00.000 NonResident 1 2 B.00.000 1.000 ----------------------- 7 C 1.000 1.

000.40.000 10.41 being controlled from India. 1.10 if Ramesh a.000. 4.000 50.000 20. Expenses for education or for any other purpose is not relevant Illustration:14 The following are the income of Mr. Dividend from domestic company Rs.Y.000 10.000. 60.000 50.50.5.000. No Income Ordinary Resident Not Ordinary Resident A 1 3 10 2 8 3 2 Indian income Income accrued and received in India Income from business in India Interest on deposits with SBI Bangalore Income accrued in India but received outside India: Income from business in India but received In Pakistan Income received in India but accrued outside India Salary received in India but services were rendered in Iran. Income from business in India Rs 30. Income from agriculture in Pakistan Rs. Income from business in London but controlled from India (1/3) received in India Rs. 7.20.Ramesh for the previous year 2008-09. 9.000 20. Salary received in USA for services rendered in Delhi Rs.000 30. ii.10. Here through it is a foreign income from business (earned and received outside India. Interest on deposits with State Bank in Bangalore Rs. nobody is taxed iii.000.000 30. 10. Salary received in India but services were rendered in Iran Rs.Y.000.000 20. Agricultural income from Hubli is exempted income and so. 30. Income house properly in Japan not received in India Rs. Non-Resident Ramesh Computation of Total Income of Ramesh for the A.000. Sl. Compute the total income for the A.) the business is controlled from India and therefore both OR and NOR are taxed.000.10. 3. NonResident 30. 11. 2.000.30.2009-10. Income earned and receiving in Japan and the amount was remitted to India Rs.000 10. Past untaxed foreign income brought into India during 2008-09 8.000. Not ordinarily Resident c.000 . Income from business in India but received in Pakistan Rs. 6. 5.000 50.2009. Ordinary Resident b.

for services rendered or in Delhi 10.000 .000 60.42 5 4 11 Income from business in London (1/3) received in India.S.000 10.A.000 60.000 10.000 60. Income deemed to accrue in India Salary received in U.

9000 7. 7 D. Rs.000 .000 2.Y. 3.000 10.8.15.80.000 -----------20.000 -----------2.Y.000 6.3. Income from business in London but controlled from India (1/3) received in India and the reaming 2/3 is a foreign income from business controlled from India Illustration :15 Salman Khan has the following incomes during the ³P. Income from HP earned and received in Japan Past Untaxed foreign Income brought into India during 2007-08 Income from house property in Japan not received in India Exempted Income Dividend from domestic company Total Income 40.00. 5 1 9 C.) Income from agriculture in Pakistan Income from Business in London but controlled from India (2/3 only).000 Note: 1. Dividend from domestic company is exempt from tax. Interest on SB a/c with SBI Rs.000 5. Remitted to India is not receipt of Income in India 2. Dividend earned in Russia from a company there" out of which Rs 2.2009-10 1.12.000 20. Income from business in Bangladesh but controlled from India Rs. Profit from business in Iran received there only.12.1.500 was received in India.43 B. You are requested to compute his total income as if he is a (i) Resident. Foreign income Income accrued and received outside India (Foreign income. Rs. Income from agriculture in Indonesia being invested there Rs.000 3.000 ---------------------------------- -------------------------------------------------------- -----------2. Salary received in Belgaum Rs. Income from house property in India Rs.500 8.80.000 -----------30. (ii) Not Ordinary resident (iii) Non-Resident for the A. Amount brought into India out of past untaxed income earned in Germany.000 4.000 -----------1.2008-09. Rs.10.

3 and 7 of which 2.500 only are Indian incomes taxable to all.500 8 Profit from business in Iran received 1.000 12. (b) Not Ordinarily Resident.000 being invested there ----------- ----------- 6 Income from business in Bangladesh 9.000 but controlled from India. 2. Total Income 58.000 15. 2. Item 5 and g of which 1000 only are foreign incomes taxable to only resident.2009-10.500 company there" out of which Rs. Item 6 is a foreign income but it is from business controlled from India.000 ----------- 7 Dividend earned in Russia from a 3. Hence taxable to NOR also Illustration: 16 Compute total income of an assessee from the following if he is (a) Resident. (c) Non-Resident for the A.000 ----------NonResident Amount brought into India out of past ----------untaxed income earned in Germany.000 8.500 37.000 8.if he is.Y.000 ----------15.000 there only .000 12.44 Solution: Computation of Total Income of Salman Khan for the A. Item 1.Y. 9.500 was received in India. 3.500 Notes: 1. Sl. 5 Income from agriculture in Indonesia 10.2009 ± 10 .500 ----------- ----------- 46.000 12. 2.2.500 2.000 8. No Income Ordinary Resident Not Ordinary Resident 1 2 3 4 Salary received in Belgaum Income from house property in India Interest on SB a/c with SBI 15.

Interest on bank deposit in India 2.000 --------20. 4.000 --------NonResident Kerala --------- Income from business in Mumbai but 20. Hence taxable to NOR also. 2. Income Ordinary Resident Not Ordinary Resident 1 2 Interest on bank deposit in India Agricultural exempt 3 4 Agricultural income from Singapore 10.000 Agricultural income from Kerata 5.2009 -10 If the Assessee is: Sl.000 income from 2.000 received in Karachi 5 income from hotel business in London 50.200 Rent from house property in Dhaka Rs.000 --------20. No.000 Income from hotel business in London controlled from Bangalore 50.000 Notes: 1) item 1 and 4 are Indian incomes taxable to all.000 Agricultural income from Singapore 10. 3. 7.45 1.000 controlled from Bangalore 50. 6.000 is spent Total Income 1.000 Rs.000 out of which 10.12. . 2) Item 3 and 6 are foreign incomes taxable to only resident.000 --------- 6 Interest on post-office savings Bank --------Account [exempt] --------- --------- 7 Rent from house property in Dhaka 30.Y.000 Income from business in Mumbai but received in Karachi 20.000 2. 3) Item 5 is a foreign income but it is from business controlled from India.000 is seen: Solution: Computation of Total Income for the A. 30.000 22.000 --------2. 30.000 --------- --------- 72.000 out of which 10.000 Interest on post-office Savings Bank Account 1. 5.

000 NonResident . if he is a Resident.000 8. 2009 .000 Solution: Computation of Total Income for the A. controlled from Mumbai 10.S.A.46 4) Agriculture Income in India only exempted and from foreign country it is taxable. Interest on loan received in Belgaum 73. but received in U. Agricultural income received in Cyclone 2. Rent from Plant and Machinery in Mysore.000.000 73.A.000 Mysore. 8 Interest on loan received in Belgaum Foreign Income: 3 Profit from a retail business in 10.000 2.000 10. 5. Profit from sale of building in Italy 8. Salary received in India for services rendered in Japan and 50 % of it spent in London 51.000 15. Profit from a retail business in France.000 51.Y.10 from the following.000 rendered Japan and 50 % of it spent in London 4 Rent from Plant and Machinery in 15.2009 -10 if the Nagesh is: Sl.000 73.000 7. 6. controlled from Mumbai 10.000 51. Not-ordinarily Resident and Non-Resident :1. No.000 15.000 5.000 France. but received in U. Income Ordinary Resident Not Ordinary Resident Indian Income 2 Salary received in India for services 51. Past untaxed foreign income brought to India during previous year 10.S.Y.000 4. Income from let-out house property situated in China 22.Expenses are not to be taken Illustration: 17 : Compute income of Sri Nagesh for the A.000 73.000 3. 15.

Royalty received for publication of Book Rs. 5.000.000 .000 ---------- ---------- 1. Rent from house property in Pakistan Rs.39.000 Notes : 1. Hence taxable toNOR also Illustration: 18 Nitish Kumar has the following incomes during the P.30.000 situated in China ---------- ---------- 6 7 Profit from sale of building in Italy Agricultural cyclone income received 8. Item 1.000.47 1 Income from let-out house property 22.4 and 8 are Indian Income taxable to all. but controlled from Delhi.30. 3.000 in 2. Agriculture income in Nepal Rs.60.000 1.6. 6.81. 30.000. 1. Interest on fixed deposit in Reliance Ltd. Compute the Total income for the A. 2. 3. 8.000. 15.15. Past untaxed business income brought into India Rs.Y 2009-10 if he is (a) Ordinary resident (b) Not ordinary resident (c) Non-resident .Y.6 and 7 are foreign incomes taxable to only resident.000. 7. 2. (of which he paid Rs. Rs. Profit on sale securities of Nestle Ltd. Item 3 is a foreign income but it is from business controlled from India. Half received in India.2008-09 1. Income from Accountancy profession in France Rs.49.000 ------------------- ------------------- 5 Past untaxed foreign income brought ---------to India during previous year Total Income 1. In Germany Rs.000 as donation to NDF) 4. Dividend earned from HMT Ltd. Item 2.000.000. Mumbai Rs.6.00.

000 15. Hence ignore them. An income when received in India it is an Indian income taxable to all 3.000 30. in Germany 2 8 Agriculture income in Nepal 30.000 Ltd.000 30. --------[exempt] Total 1. 30. 2. 3 Interest on fixed deposit in Reliance 30. 4.000 NonResident Past untaxed business income brought --------into India [exempt] 5 Dividend earned from HMT Ltd. Dividend from Indian co. is exempt. but controlled from Delhi 7 Profit on sale of securities of Nestle 15.000 --------- --------- 1. No.000 ------------------------------------------------60. Agriculture Income in India only exempted and from foreign country it is taxable.000 15.000 60.000 Note: 1.000 Ltd. Mumbai (of which he paid As 6.Y.20.000 in France.000 15.000 Book Foreign Income: 4 Income from Accountancy profession 60.000 Half received in India.2009-10if the Nitin Kumar is: Sl.48 Solution: Computation of Total Income for the year A..000 as donation to NDF) 6 Royalty received for publication of 15. .80. Expresses and donations out of income is not considered. Income Ordinary Resident Not Ordinary Resident Indian Income 1 Rent from house property in Pakistan.000 15.

.000 ----------------- Past untaxed income brought into --------India 7 Income from agriculture As.10. 3. 10. 40.000.into India Rs.000.000 20.S. Rental income in Pakistan As. Dividend received from a domestic company Rs. 40.A.000 from Sri Lanka and received in India 5. Income Ordinary Resident Not Ordinary Resident NonResident 1 Profit from business in U. 10.2009-10if the Mr.000.000 5. 3 Profit from sale of machinery in 20. 10.000 deposited there only.000 40.000 20.S. Profit from sale of machinery In Nagpur Rs.000 there only. if he is (a) Resident.000 controlled from Mumbai. 2 Rental income in Pakistan deposited 10.000 from Sri Lanka and received in India As.Y. 20. From the following: (i) (ii) (iii) (iv) (v) (vi) Profit from business In U.Y. Mahesh is: Sl.000. 5. Income from business in Bangalore but received in London Rs. 50.000 20. 20.000. No. (b) Not-ordinarily resident. As.000 --------- controlled from Mumbai. Past untaxed income brought .49 Illustration: 19 Find out total income of Mr.000 . Mahesh for the A.A. Computation of Total Income for the year A.000 Nagpur 4 Income from business in Bangalore 20.000 but received in London 5 6 Dividend received from a company ----------------------------------------20. Income from agriculture Rs.2009 . and (c) Non-resident.000 10.

15.000 .000. No.000 Salary received in Mumbai for 40.2009 -10 If the Anish Kumar Is: Sl.30. Income from Agriculture in Bangalore Rs.000 6.Y.OOO 7. 10.15000.000 Solution: Computation of Total Income for the A. received in Karachi deposited there Rs. Income from business in Mumbai AS.25.000. 5. Income from business in Lahore controlled from Dacca (1/2 received in India) 20.50 Rs.000 Out of Income from agriculture from Sri Lanka amount received in India is Rs. Salary received in Mumbai for services rendered in Dacca (computed) 40.00. Past untaxed foreign income brought into India during the P. Illustration: 20 Compute total income of Shri Anish Kumar for the A. 2. 5.000 --------40.ltis Indian income taxable to all and remaining is foreign income taxable only to resident.Y. 3. Total Income 1.000 85.000. 2009 ± 10 ~is a Resident.000 8. Income Ordinary Resident Not Ordinary Resident Income 1 Income from Agriculture in ------------------------NonResident Bangalore[exempt] 2 3 Income from Agriculture in Nepal 15.000. Income from business in Sri Lanka but controlled from Mumbai Rs.20.000 --------40.000 45. not ordinarily resident and Non-resident from the following: 1. 5. 4. Income from Agriculture in Nepal Rs.Y.000.

51 services {computed) rendered in Dacca .

. Dividend received in London from a company registered in India operating in UK Rs.1.000 but controlled from Mumbai 30. 4. 2008 ± 09.K.46. Hence taxable to NOR also.000 5. Income from property in London received there Rs.12. Total Income 1. 21 : Murphy.000 6.4 and 7 of which half are Indian incomes taxable to all. Profit on sale of plant at London (1/2 received in India) Rs.40. a foreign national. Profit from business in Delhi managed from Surat Rs. Item 3.52 4 5 Income from business in Mumbai 25.000 --------- Rent received in Karachi deposited 5. Development bond (received in London) Rs.45.000 10.000 25.000 2.1 .25. Item 5 is a foreign income but it is from business controlled from India. Salary received in London (1/2 is paid for service in India) Rs. Illustration.1.000.15. Profit on sale of plant at Delhi (1/2 received in USA) Rs.000 --------- 7 Income from business in Lahore 20.000 there 6 Income from business in Sri Lanka 30. Item band 7 of which half are foreign incomes taxable to only resident.Y. 3.49.000 75.000 received in India) 8 Past untaxed foreign income ------------------------- brought into India during the P. Interest on U.20.000 1.000 --------- 25.17. Rental Income from property in Nepal credited to a Bank Account in Delhi Rs.000.000 8. 2.02.30.OOO 9.000 7. Income from agriculture in London (half of which was spent for hospital expenses and balance remitted to India later) Rs.000 3.000 controlled from Dacca (1/2 10.Y. furnishes the following particulars of his income relevant for the P. 1.000 1.

000 'received in India.00.000 1.000 1.Y. .00.02.000 12. Ordinary Resident 2.02.000 60.53 10.00.000 credited to a Bank at Delhi (Direct credit to Bank is received in India) 12. received in India.000 73.000 .000 Income Ordinary Resident Not Ordinary Resident NonResident received in London (1/2 paid for (1/21 accrued in services in India) India & Y2accrued & received in London 8 Profit from business at Delhi but 49.2009 -10 If Murphy.000 73.S.00.000. 9 Rental income from property in Nepal 12.2009-10 if he is 1.000 49.1/3 of 3.000 49. A 1 Indian Income Profit on sale of plant at London (1/2 73.000 60. Gift in foreign currency from a friend in USA (1/3 of which received in India) Rs 3.A.000 1.000 'received in USA) (Accrued in India) 3 Salary from an Indian company 60.00.000 in U.000.000 1. Remaining 1/2 received outside) 2 Profit on sale of plant at Delhi (1/2 1. No.Y. Is: Sl.000 manage from Surat 10 Gift in foreign currency from a friend 1.02. Compute his total income for the A. Not Ordinary Resident 3. Non-resident Solution: Computation of Total Income for the A.

96.000 (Remaining ½ received outside India) ------------------- 4 Interest on U.24. 2006 he had gone to Nepal for 88 days.K. .he was at South Africa for 180 days.000 3.000 received there ---------- ---------- 3 Salary from an Indian company 60. 2. He submits the following details of his income for the P.000 3.000 Illustration 22 : Harsha gives the following information: 1.S.K .54 B 1 Foreign Income Profit on sale of plant at London 73. C 7 Exempted Income Dividend received in London from a ---------company registered in India but ------------------- operating in U. Expenses are not considered. Dividend received in London from a company registered in India but operating in U. On 16th July. 3. 4.K.09 .000 ------------------------------------- Gift in foreign currency from a friend 2. 2008 . In the Previous Year 2008 .S. 8.000 ---------- ---------- 5 Income from property at London 30. Total Income Note: 1.is an exempted income. 2.000 in U.00.09. On 30th September 2001 he went to Sweden and came back to India after 90 days. received in London development Bone 40.A.000 ---------- ---------- received in London (1/2 accrued & received in London 6 10 Income from a agriculture in London 25. Remittances are not amounting to "received in India" 3. Harsha went to Germany for the first time on 8th April1998 and came back to India On 20th June.2/3 received in U.Y.A. 1998.96.

a non-resident. Hence he is a resident as he satisfies first basic condition.09 (For instance.1.10.2002 and in 2006 . Additional conditions: To determine whether he is an Ordinarily resident or Not ordinarily resident in India one has to test the additional conditions.00.2009 Solution: .OOO Determine the residential status of Harsha and compute his total income for the A. 3.OO.09.55 1.Y. Interest received from Gopinath.20. He was resident for at least in two Previous Years immediately preceding P.000 4. Thus he satisfies both the additional conditions.Y 2008 .Y.40. 2008.) 6. on the loan provided them for a business in India Rs. for technical services provided for a business carried on by him in Singapore RS.1. Royalty received in Singapore form a resident in India.000. . Hence his residential status is Resident for the A.OOO (the business is controlled from India and half of the income received in India. Income of the business in Japan RS.OOO 5.05.Y. 2. in 2001 . 7.2008 -09 .09 he was in South Africa for 180 days.6. Thus he stays in India for 185 days. 2009. Salary Rs.80.30. Basic condition: During the previous year 2008 .Y. Dividend from England company received in India Rs. House rent of the house situated in Nepal received in IndiaRs.000.OOOreceived in Japan for the services rendered in India.07 his stay in India was more: than 182 days in each year and therefore Resident in both the years) and also stayed in India for more than 730 days in 7 previous years preceding the P. Commission received in India for the services in Shrilanka RS. Solution: The Residential status of Harsha is Ordinarily resident in India for the A.

000 technical services provided for a business carried on in Singapore Total 9. this business is controlled from Bangalore C. Royalty received in Singapore form a resident in India for 1. Remuneration for cricket coaching in India Rs .No Indian Income 1. Dividend from England company received in India 5.5. 3.00. Income from business in Japan controlled from India 6.000 6.10. F.000 D.80.15. Agriculture income from Sri Lanka Rs. Income from Business in Sri Lanka Rs. 40. Interest received from Gopinath a non-resident on the loan provided to him for a business in India Foreign Income 6.000 1.000. Dividend declared in Sri Lanka but received in IndiaRs.OOOof which half is received in India B.000 E.60.000 remitted to India.000 7.05. a cricketer of Sri Lanka provides you the following information for the AY 2009.000 1.56 Computation of Total Income for the A.05.000.000 Income Rs Case Study 1: Mr.000 30. Salary received in Japan for the services given in India 2.000 80. Is: S.00.000 40. . House rent of the house situated in Nepal received in India 4.OOOof which Rs.000 20. Rent from property in Sri Lanka received there Rs.2009 -10 If Harsha. Commission received in India for the services given in Shrilanka.00..60.00. Murlidharan.Y. A.75. Income from Units of UTIRs.

Murlidharan comes to India only for 50 days every year? 4. one has to test the additional conditions. But in 7 preceding PYs. prove it by taking the above information.99.Murlidharan. Solution: In order to determine the Total income of Mr.Because like in the case (a) above he satisfies second basic condition and the becomes a Resident.09 and more than 365 days in four years preceding the PY 2008 . . He satisfies first additional condition of being Resident at least in Two PY years during 1~ preceding PYs as he stays every year for 100 days.a Sri Lankan cricketer.57 Questions: 1. 3. his total stay is only for 700 days @ 100 days per year and thereby fails to comply with second additional condition. in most of the years his status will be Resident as he satisfies second basic condition. His total stay .first we have to ascertain the residential status on the basis of his stay in India. and if not. give the reasons. Murlidharan stays in India for 110 days Any & every PY. Also he will be the Resident at least in 2 out of 10 PYs preceding more ih2008 . Murlidharan for the A Y 2008 . Hence. Do you think that the incidence of tax depends on the residential status? If yes. if he has been coming to Bangalore for 100 days every year since 1998 .09 if he has been coming to Bangalore for 100 days every year since 1998 . Answer1): Determination of Residential status of Mr. He stayed in India for more than 60 days during the PY 2008 .99. Answer 2): Answer will be different if Mr.In such a case his Residential status will be Ordinarily Resident for the bee 9 . Will your answer be different if he has been coming to India for 110 days instead of 100 days every year. Determine the Taxable income of Mr. To decide whether he is an Ordinary Resident or Not Ordinarily resident.09 as he has not fulfilled 0 the additional conditions. 2. What will be the Total income if Mr.Murlidharan. his status is NOR for the AY 2008.10.09 (@ 100 days per year comes to 400 days in four years).09 so that he satisfies first additional condition. Thus he is a Resident as he satisfies second basic condition.

000 1. least 60 days stay is required during the relevant PY as a part of second basic condition suppose if he stays in India only for 50 days during the PY 2008 -09 he cannot satisfy any of the basic conditions and therefore he would be a Non Resident. 2.00.OOO.To become a Resident'. Answer 4): Yes. the question of additional condition becomes irrelevant. In such cases.000 received in India 3) Dividend declared in Sri Lanka but received in 5.@ 110 day for 7 years amounts to more than 730) Thus he satisfies second additional condition also. the Total income of an assessee depends on the Residential status This can be proved on the basis of the following working note.45.000 from India 80.000 5.15.00.1.000 -------1. Murlidharan comes to India only for 50 days every year . If Mr.000 If Mr. Murlidharan is a Not Ordinarily Resident (staying for 100 days in a year) his income would have been Rs.resident for the AY 2009 .35. Murlidharan is an Ordinary Resident(staying 110 days every year) his income would have been Rs. Working Note: Computation of Total Income for the AY 2009-10 Mr.His Residential status will be Non .OOO.000 5.000 30.58 in India will be 730 d an 730 days in 7 preceding PYs (Le. Murlidharan is a Non Resident ( staying for 5 days in a year) his income would have been Rs.10 . Therefore he will be an Ordinarily resident. Indian Income 1) Agriculture income from Sri Lanka Of which half 30.000 India 4) Remuneration from cricket coaching in India B. This proves that the Total income depends on residential status of an assessee. Answer 3): If Mr. Foreign Income 2) Income from business in Sri Lanka.000 30.00.and If Mr. but controlled 80.2.000 OR NOR NR .000 1. Murlidharan IsParticulars A.

Regan is a foreign citizen. Income deemed to accrue in India Rs.35.15.000 10. 70.45.e.000 2.000 received in India) d. She came to India for period of 150 days . Income from business in Nepal controlled from India (40% 40.000 c. Royalty received in India from the Government of India 3000 30. Dividend from an Indian company e. Case study 2: Mrs.000 1. Interest on company deposits in India b. Interest received from a foreign company outside India (on loan 70. Interest received outside India from Government of India g. Salary received in India for services rendered in Nepal f.000 50.000 outside India C.s her stay in India was as follows:2008-09 2007-08 2006-07 2005-06 2004-05 241 341 Nil 1150 350 04 03 02 01 00 During the PY 2008 .Y.000 20. Half of it received in India is Indian income and remaining half is received outside India is a Foreign income.59 1) Agriculture income from which half received 30.000 which is utilized for doing business in India) Questions: 1.09 She has the following incomes: Particulars a. Exempted Income Income from Units of UTI Total -------- -------- -------- -------- -------- 2.000 h.000 Note: Agricultural income earned in Sri Lanka is a taxable income i. . Determine her Residential status on the basis of the above information. it is no: exempt from tax.In earlier P.

Regan is of an Indian origin? 3. Compute the gross total Income for the AY 2009 . Regan is a NonResident.60 2.10 if Mrs. Would your answer be different if Mrs. .

1.10.10 S. but hens he is considered as of Indian origin.000 50. Additional conditions: She is Resident in more than 2 PYs out of 10 preceding PYs. Regan is a foreign citizen and not an Indian Origin. Her total stay during the PY 2008 . Basic condition: She is a Non Resident for the AY 2009 . Regan satisfies second basic condition. So the first basic condition is not satisfied. Answer2. . So she is Resident in India.05 to 2007 -08) his total stay was 115+14+21+ 360 = 510 days)Thus. In such cases. So.000 Rs. Computation of Gross Total Income Mrs. Her presence in India is for more than 60 days during 2008 -09 and also she was in India for more than 365 days in 4 years preceding the PY 2008 -09(Le. She is Ordinarily Resident for the AY 2009 .61 Solution: Answer 1 Mrs. she becomes Non Resident Answer 3. Regan a Non Resident for the AY 2009. she is a Non Resident. A 1 2 Particulars Indian Income: Interest on company deposit in India income deemed to accrue in India. Her total stay is 1492 days during 7 preceding PYs. Regan's residential status changes on the basis of her status as Indian origin. from 2004 .10. she satisfies second basic condition. Conclusion: Mrs. Second basic condition is not functional as he is a foreign citizen of Indian origin. When she was only a foreign citizen. Residential status of Mrs. 70.09 is less than 182 days (Le 150 days only).No. Regan if she Is a person of Indian origin. she satisfies both the additional conditions and therefore an "Ordinarily Resident". Hence. Basic condition (b) fulfilled: During the PY 2008 -09 Mrs. 2. question of additional conditions is immaterial. she was Ordinary Resident.

000 Interest received from a foreign company outside India(on 70.000 10.62 3 Income from business in Nepal controlled from 16.000 . Exempted Income: Dividend from an Indian company Gross Total Income ---------2.000 20. B. Interest received outside India from Government of India Royalty received in India from the Government of India 30.000 loan which is utilized for doing business n India.000 India(40%received in . Foreign Income : Income from business in Nepal controlled from India but ---------60% accrued and received outside India C. D.) A. India. 4 5 6 7 Salary received in India for services rendered in Nepal.66.