Income Tax Concept

1. Statutory Framework Section 5 defines the scope of total income based on the taxpayer’s residential status, which determines whether income earned within or outside India is taxable. The provision categorizes taxpayers into three classes: Resident and Ordinarily Resident (ROR) Resident but Not Ordinarily Resident (RNOR) Non-Resident (NR). 2. Taxability Based on Residential Status The table below summarizes the scope of

1. Importance of Residential Status Residential status determines: Which incomes are taxable in India (Indian vs. foreign income) Applicable tax rates and compliance requirements Eligibility for certain deductions/exemptions 2. Categories of Residential Status There are 3 categories: Resident and Ordinarily Resident (ROR) Resident but Not Ordinarily Resident (RNOR) Non-Resident (NR) 3. Basic Conditions for Resident

The residential status of an individual is crucial for determining tax liability in India. It classifies taxpayers into three categories: Resident and Ordinarily Resident (ROR) Resident but Not Ordinarily Resident (RNOR) Non-Resident (NR) The rules are governed by Section 6(1) (basic conditions) and Section 6(1A) (deemed residency for high-income Indian citizens). 1. Basic Conditions for Resident Status [Section 6(1)] An individual

1. Basic Rule for HUF Residency A HUF is Resident in India if: “Control and management of its affairs is wholly or partly situated in India during the relevant financial year.” Wholly in India→ Entirely Resident Partly in India→ Still Resident Wholly outside India→ Non-Resident (NR) 2. Key Differences from Individual’s Residency ASPECT INDIVIDUALS HUF Test Applied

1. General Rule for All Non-Company Entities [Section 6(2)] The residential status of Firms, AOPs, BOIs, and other non-corporate entities is determined by: “Whether control and management of affairs is wholly or partly situated in India during the financial year.” Key Tests: Wholly in India→ Resident Partly in India→ Resident Wholly outside India→ Non-Resident (NR) Note: Unlike individuals, there is

The residential status of a company is a crucial factor in determining its tax liability in India. Section 6(3) of the Income Tax Act, 1961 (not the Companies Act) governs how a company’s residential status is determined for taxation purposes. This classification affects whether a company is taxed on its global income or only on

Section 7 of the Income Tax Act, 1961, defines certain incomes that are deemed to be received in India, even if not actually received by the taxpayer. This legal fiction ensures that specific benefits or contributions are taxed in the year they are credited or made available, regardless of actual cash receipt. Key Incomes Deemed to Be

Section 9 of the Income Tax Act, 1961, is a critical provision that determines when income is considered to accrue or arise in India, even if it is earned outside the country. This section is particularly important for non-residents (NRs) and foreign companies, as it expands India’s taxing jurisdiction over certain foreign-sourced incomes with an Indian connection. Key Categories