INCIDENCE OF TAX

Incidence of tax of a tax payer depends upon his residential status and time and place of receipt or accrual income. Based on place of receipt or accrual of income, incomes are divided into 2 types:

  1. Indian income
  2. Foreign income

Income deemed to accrual and arises in India:

  1. certain incomes are deemed to accrued or arise in India as per sec 9 of income tax Act, even though actually it might be earned outside India. Some of the examples are –
  2. income from business connection in India;
  3. income from any asset, property or source of income in India.
  4. Capital gain on transfer of capital asset situated in India.
  5. Income from salary if services provided in India. Example- pension from Indian service into USA’s A/C.
  6. Income from the salary for the services provided outside India, if employer is government of India and employee is an Indian citizen.
  7. Dividend from Indian company – dividend received from Indian company in USA is income of India. However it is exempted from tax.
  8. Interest received from government of India.
  9. Interest received from any other person if borrowed capital is utilized for doing business or profession in India.
  10. Royalty or fees for technical services received from government of India.
  11. Royalty or fees for technical services received from any other person if payment related to business or profession which is in India.

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