Section -5 of Income Tax Act, 1961 provides
Scope of total
Income in case of of person who is a resident, in the case of a
person not ordinarily resident in India and person who is a
non-resident which includes. Income can be Income from any
source which (a) is received or is deemed to be received in
India in such year by or on behalf of such person ; or (b)
accrues or arises or is deemed to accrue or arise to him in
India during such year ; or (c) accrues or arises to him outside
India during such year.
(1) Subject to the provisions of this Act, the total income of
any previous year of a person who is a resident includes all
income from whatever source derived which—
(a) is received or is deemed to be received in India in such
year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in
India during such year ; or
(c) accrues or arises to him outside India during such year :
Provided that, in the case of a person not ordinarily resident
in India within the meaning of sub-section (6)* of section 6,
the income which accrues or arises to him outside India shall
not be so included unless it is derived from a business
controlled in or a profession set up in India.
(2) Subject to the provisions of this Act, the total income of
any previous year of a person who is a non-resident includes
all income from whatever source derived which—
(a) is received or is deemed to be received in India in such
year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in
India during such year.
Explanation 1.—Income accruing or arising outside India
shall not be deemed to be received in India within the
meaning of this section by reason only of the fact that it is
taken into account in a balance sheet prepared in India.
Explanation 2.—For the removal of doubts, it is hereby
declared that income which has been included in the total
income of a person on the basis that it has accrued or arisen or
is deemed to have accrued or arisen to him shall not again be
so included on the basis that it is received or deemed to be
received by him in India.
Scope of Total Income according to residential
status is as under:
(A). In the case of Resident in India (resident and
ordinarily resident in case of individual or HUF) [Section
5(1)]:
The following incomes from whatever source derived form part of Total
Income in case of resident in India/ordinarily resident in India:
(B) In the case of a Resident but not Ordinarily Resident
in India (In the case of individuals and HUF only) [Section
5(1) and its proviso]:
The following incomes from whatever source derived form part of Total
Income in the case of resident but not ordinarily resident in India:
(a) any income which is (b) any income which
(c) any income which accrues or
received or is deemed accrues or arises or is
arises to him outside India
to be received in India deemed to accrue or during the relevant previous
in the relevant previous arise to him during year if it is derived from a
year by or on behalf of the relevant previous business controlled in or a
such person; year; profession set up in India.
(C) In the case of Non-Resident [Section 5(2)]:
The following incomes from whatever source derived form part of Total
Income in the case of Non-Residents in India:
(a) any income which is received or is (b) any income which accrues or
deemed to be received in India during arises or is deemed to accrue or
the relevant previous year by or on arise to him in India during the
behalf of such person; relevant previous year.
Thus it may be noted that income described in items (a) and (b) in all the three
cases above are to be included in total income of all the three categories of
the assessees in the same manner. The income described in item (c) i.e.
income which accrue or arise outside India is:
i. not includible in the total income at all in case the assessee is non-
resident in India.
ii. includible in the total income in the case of resident but not ordinarily
resident in India only when it is derived from a business controlled in or
profession set up in India
Therefore, the incidence of tax is likely to be more in case of an assessee who
is resident and ordinarily resident in India, a little less in case of a resident but
not ordinarily resident in India and the least in case of non-resident in India if
the assessee has various incomes both inside and outside India.
THANK YOU.
