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:
- Indian income
- Foreign income
Income deemed to accrual and arises in India:
- 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 –
- income from business connection in India;
- income from any asset, property or source of income in India.
- Capital gain on transfer of capital asset situated in India.
- Income from salary if services provided in India. Example- pension from Indian service into USA’s A/C.
- Income from the salary for the services provided outside India, if employer is government of India and employee is an Indian citizen.
- Dividend from Indian company – dividend received from Indian company in USA is income of India. However it is exempted from tax.
- Interest received from government of India.
- Interest received from any other person if borrowed capital is utilized for doing business or profession in India.
- Royalty or fees for technical services received from government of India.
- Royalty or fees for technical services received from any other person if payment related to business or profession which is in India.