UNIT-I

INTRODUCTION TO TAX
1.1: Introduction to income tax:
Tax: Tax is a compulsory payment to be made by the citizens of a country to the government without
expecting any direct returns or benefit for it.
1.1 a: Characteristics:

1. Tax is a compulsory payment to be made by the citizens to the government, whether they like or not.
2: A person paying a tax cannot expect any direct return or benefits.
3: Taxes are collected to provide common services and not specific services.
Classification:
Taxes levied by a government can be broadly classified into 2 categories. They are: 1: Direct
2: Indirect Taxes
Direct Tax is one where the person on whom it is imposed pays it directly to the government without
shifting its burden to others. Example: Income Tax, Wealth Tax, Gift Tax etc.
Indirect Tax is one where the person on whom it is imposed [who pays first] can shift the burden wholly
or partially to others. Example: Excise duty, Customs duty, Sales tax etc.

Income Tax: Income Tax is a tax on income. It is an important and significant source of revenue to the
government. It serves 3 purposes:
1: It provides revenue to the government.
2: Socio - economic growth by providing tax incentives and concessions. 3: It brings economic equality
in the community.
Income Tax is a very important direct tax, collected by the Central Government and is shared between
Central and State Government as per the recommendation of finance commission.

1.1 b: History: Income Tax was introduced temporarily in 1860 by Sir. James Wilson to cover the losses
sustained by the government on account of the Military Mutiny of 1857. Several amendments were
made from time to time and it became a permanent feature in 1886. The present Act is "Income Tax
Act of 1961" which came into force from 1.4.1962.
1.2 : Assessee: [Sec. 2(7)]: Assessee means a person by whom any tax or any other sum of money is
payable under IT Act. If a person's income is computed and even if he is not liable to pay tax, still he
is called "Assessee".

1.3 : Person:

The term Person [U/S 2(31)] includes the following: a: An Individual.

b: A Hindu Undivided Family. c: A Firm, registered or not.
d: A Joint Stock Company, Public Ltd or Private Ltd.
e: An association of persons were incorporated or not.
f: A local authority like Municipality, City Corporation etc. g: Artificial and Juridical persons.

A person may be assessed on his income or on the income of others. If a person is assessed on others
income, he is called "Deemed Assessee"
Example 1: After the death of a person, his legal representative has to pay tax on the income of the
deceased till the date of death.
Example2: A person representing a foreigner, a minor or a lunatic and in all these cases he may have to
pay tax on the income of foreigner, minor or a lunatic.
A person is deemed to be an "Assessee in Default", if he fails to fulfill any statutory obligation imposed
on him under the IT Act
Ex: An employer may have to pay tax on the income of the employees, if he fails to deduct the tax at
source or fails to deposit such tax in government treasury, the above employer is said to be “Assessee In
Default”.

1.4 : Definition of Income: [U/S. 2(24)]: Income is a very important term as Income Tax is charged on
the income of a person. The term has not been defined in IT Act, but Sec. 2(24) gives a list of items
which are treated as income. They are:
1: Profits and Gains. 2: Dividends.
3: Voluntary contribution received by a trust created for charitable purposes.
4: The value of any perquisite or profit in lieu of salary under the head "Salaries". 5: The value of
benefit or perquisite claimed by deemed assessee.
6: The value of any benefit or perquisite from a company to a director or to a substantial interest
holder (not less than 20% of voting power)
7: Any sum chargeable to tax U/S 28 (Profit from business or profession) 8: The value of any
benefit or perquisites chargeable U/S 28.
9: Any sum received in the previous year which was allowed as a deduction earlier. 10: Capital gains
U/S 45.
11: Any income chargeable to tax U/S 56.
The list is not exhaustive. The Income may be defined as "A periodical monetary return coming in with
some sort of regularity from definite sources".
The following Principles are applied to income from Income Tax point of view: 1: Income earned
whether legally or illegally is chargeable to tax.
2: It is not necessary that the income should be received regularly & periodically. Even income
received in lump sum can be charged to tax.
3: Income should be received from outside. The income of a non - trading concern cannot be treated
as income because; it gets it from its own members.
Example: If any pocket money received by son from his father is not income at all.
4: Income may be received in money or money's worth. Even income received in kind or service can
be treated as income.
5: It is not necessary that income must be actually received. Even outstanding or accrued incomes are
taxable.
6: If a receipt is not treated as income originally, later it cannot be treated as income. 7: Income must
have come from a definite source.
8: Mere relief from expenses and obligation is not income at all. A person is changed to tax not on what
his pocket saves, but on what actually goes into his pocket. If the employee's loan is sacrificed by the
company it will not be treated as income.
9: There is difference between application of money and diversion of money. Any voluntary payment by
husband to wife, father to son will not be treated as transfer and so, full income is chargeable to tax in the
hands of transferor (father, husband), is the case of "Application of money". On the other hand, if there
is a legal charge on the income of the person, to that extent his income is reduced. It is called "Diversion
of money" and taxed in the hands of transferee (son, wife).

1.5 : Assessment Year: U/S 2(9): [AY]

It is also called Tax Year or Financial Year. It is the period during which the income of an assessee
relevant to the previous year is calculated & the tax ascertained & paid. It is a period of 12 calendar
months commencing from 1st April every year & ending on 31st March of the next year.

Previous Year: U/S 3: [PY]

It is a period of 12 months immediately preceding the assessment year. It is also called Income Year or
Accounting Year, during which income is earned. Tax is assessed in the AY on the income earned in the
PY. PY also starts on 1st April every year for all assessed. In case of a newly set up business or
profession, the PY will begin from the date of setting up of the new business or profession & end with the
said financial year. In such a case the 1st PY will be less than 12 months. Income Tax is charged on the
total income of the PY at the rate prescribed by the relevant Financial Act for the AY. However, there are
certain Exceptions where the assessee will pay tax in the year of its earning.
1: Income of non - resident from shipping business: U/S 172
Any income derived from shipping business at a port in India will be taxed in the year of its earning.
2: Income of person leaving India: U/S 174
If an assessee leave India without the intention of returning [to India], total income of such an assessee up
to the date of departure should be taxed in the same year.
3: Transfer of property to avoid tax: U/S 175
In the opinion of Assessing Officer an assessee is likely to transfer his property to avoid tax, the total
income of such an assessee shall be charged to tax in the same year.
4: Income of discontinued business or profession: U/S 176
The total income of discontinued business or profession will be assessed in the year of its earning.

1.6 : Definition of Agricultural Income:

Since beginning, Agricultural Income was not taxed for two reasons-firstly it is in the State List.
Secondly, land revenue is levied on agricultural land. So, the people began to treat all their
incomes which have some connection with land, as agricultural income. In order to check such a practice,
the Income-tax Act of 1961 has defined 'agricultural income'.
According to Sec. 2(1) of the Act, Agricultural Income means:

1. Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.
2. Any income derived from such land by

(i) Agriculture, or

(ii) The performance by the cultivator or receiver of rent in kind, of any process ordinarily employed to
render the produce fit to be take into market, or
(iii) The sale by the cultivator or receiver of rent in kind of the produce in respect of which only the
process mentioned in (ii) has been performed.
3. Any income derived from any building owned and occupied by the cultivator or receiver of rent-in-
kind, provided -
(a) The building is on or in the immediate vicinity of the agricultural land and is used by the cultivator or
receiver of rent-in-kind as dwelling house, store house or out building. The land is not assessed to land
revenue or local rate, it is situated outside urban areas, i.e. any area comprised within the jurisdiction of
municipality or cantonment board with a population of 10,000 or more; or in any area within a distance
of 8 Kms. from the local limits of such municipality or cantonment board. This area of 8 kms may be
reduced by the Central Government considering the need of urbanization.
When we go through the above definition three important conditions emerge in order to treat a particular
item as Agricultural Income. They are-
1. The rent or revenue must be derived from the land.

2. The land must be situated in India.

3. The land must be used for agricultural purposes.

'Rent' is payment in money or in kind by one person to another for grant of right to use the land. It
becomes agricultural income if other two conditions are satisfied. It is not necessary that the recipient of
rent should be the owner of the land. The word 'revenue' is used in the broader sense of return, yield or
income. It covers income other than rent. Rent or revenue can be said to be 'derived from land' only if the
land is the immediate and effective source of the revenue and not the secondary and indirect source. For
instance, the dividend paid by a company out of its agricultural income is not revenue derived from land.
Similarly interest on arrears of rent payable in respect of land used for agricultural purposes is not
agricultural income. The rent or revenue is agricultural income if the land is situated in India. Income
from foreign agricultural land is outside the scope of exemption under section 10 (1).
The Act has not defined the term agricultural purpose. "Agriculture" in its root sense means agar a field
and culture, cultivation of a field. "It is the art or science of cultivating the ground especially in fields or
large quantities including the-preparation of the soil, the planting of seeds, the raising and harvesting of
crops and rearing, feeding and management of livestock, tillage, husbandry and farming. In its general
sense it also includes gardening or horticulture." At one time "agriculture" was understood in its primary
sense of cultivation of fields for production of food crops. There was another interpretation which
included not only products raised by cultivation of land but also allied activities which have relation to
land. This conflict was finally resolved by the Supreme Court in CIT v/s Raja Benoy Kumar Suhas Roy
(1975). Justice Bhagwathi laid following principles to serve as a guide in the determination of the scope
of "agricultural purposes".
(i) Basic operations involving human skill and labor upon the land.
(ii) It such as tilling of land, sowing of seeds etc. must have been performed.
(iii) Subsequent operations are performed after the produce sprouts such as weeding, tending, and
pruning, cutting, harvesting and rendering the produce fit for the market.
(iv) Agriculture does not merely include food and grains. It includes all products from the
performance of basic and subsequent operations such as grain, vegetables, fruits, groves, grass,
coffee, tea, spices, tobacco, betel etc.
(v) Mere connection with the land is not enough. Products which grow wild on the land or of
spontaneous growth not involving any human labor or skill upon land are not agricultural
products.
(vi) Where it is not easy to find ready market for the crop harvested, it has to be made salable. For this
some kind of process has to be performed. The income arising by way of enhancement of value of
such produce is also agricultural income. Such processes include thrashing, winnowing, cleaning,
drying, crushing, boiling etc. Nature of the process depends upon the type of the product and
varies from time to time and place to place. The Karnataka High Court in K. Lakshanasa & Co.
Vs CIT (1981) held that feeding of mulberry leaves to silk worms is not a process employed by a
cultivator of mulberry leaves to make them marketable by way of producing of silk cocoons. The
High Court held that just as milk yielded by a cow cannot be considered as a marketable form of
grass or any other fodder eaten up by cows, the silk produced by silkworm cannot be considered
as a marketable form of mulberry leaves. As such the income derived from the sale of such
cocoons cannot be treated as agricultural income.
Some examples of agricultural income:

1. If depended parts of the forest are replanted and subsequent operations in forestry are carried out, the
income arising from the sale of replanted trees.
2. The fees collected from owners of cattle (normally used for agricultural purposes), for allowing them
to graze on forest lands covered by jungle and grown spontaneously.
3. Profit on sale of standing crop or the produce after harvest by a cultivating owner or tenant of land.
4. Rent of agricultural land received from sub-tenants by mortgagee in possession.
5. Compensation received from an insurance company for damage caused by hail storm to the green leaf
forming part of assessee’s tea garden (more over no part of such compensation consists of
manufacturing income, as such compensation cannot be apportioned under rule 8 between
manufacturing income and agricultural income).
6. Income from growing flowers and creepers.

7. Share of profit of a partner from a firm engaged in agricultural operation (similarly, salary received by
him for rendering services is agricultural income as salary is only a mode of adjustment of the firm's
income).
8. Interest on capital received by a partner from the firm engaged in agricultural operations.

Some examples of non-agricultural income:

1. Annual annuity received by a person in consideration of agricultural land even if it is charged, on land,
as source of annuity is covenant and not land.
2. Interest on arrears of rent in respect of agricultural land, as it is neither rent nor revenue derived from
land.
3. Interest accrued on promissory notes obtained by a zamindar from defaulting tenants.

4. Income from sale of forest trees, fruits and flowers growing on land naturally, spontaneously and
without the intervention of human agency,
5. Income from sale of wild grass and reeds of spontaneous growth.

6. Income of salt produced by flooding the land with sea water as it is not derived from land used for
agricultural purpose.
7. Profit accruing from the purchase of a standing crop and resale of it after harvest by a merchant having
no interest in land except a mere license to enter upon the land, gather upon the produce, as land is not
the direct, immediate or effective source of income.
8. Remuneration received by managing agent at a fixed percentage of net profit from a company having
agricultural income,
9. Interest received by a money-lender in the form of agricultural produce.

10. Income from sale of agricultural produce received by way of price for water supplied to land.
11. Commission earned by the landlord for selling agricultural produce of his tenant.

12. Dividend paid by a company out of its agricultural income.

13. Income derived from land let out for storing crops,

14. Income from fisheries.

15. Maintenance allowance charged on agricultural land.

16. If the assessee takes loans on hypothecation of agricultural produce cultivated by him, and
advances the same to the sister concerns, interest earned thereon is not agricultural income.
17. Royalty income of mines.

18. Income from butter and cheese making.

19. Income from poultry farming.

20. Income from sale of trees of forest which are of spontaneous growth and in relation to which
forestry operations alone are performed.
21. A cultivator of agricultural land is paid Rs. 50,000 as compensation by the Government for the
occupation of that land by the Military. (However, if it is against the loss of current standing crop, then
it becomes agricultural income.)
22. Income from supply of wafer by assessee from a tank in his agricultural land.

23. Income from sale of flowers and creepers where the flowers and creepers are cultivated as hobby.
24. Income from agricultural land situated outside India.

Present Position: Till 1974 agricultural income was fully exempt from tax. However, it was felt that
agricultural income should also be brought into income tax net. A committee under the chairmanship of
Prof. K. N. Raj was appointed in 1973 to study the possibility of levying tax on agricultural income. The
committee recommended for total integration of agricultural income with non-agricultural income. But
the Government opted for partial integration. As a consequence, from the assessment year 1974-75
onwards, agricultural income of non-corporate assessees is being partially integrated with non-
agricultural income. It is done on the following lines:
(1) The non-agricultural income of the non-corporate assessee must exceed the exemptible limit.
(2) The agricultural income must be more than Rs. 5000.
(3) The non-agricultural income will be exempt first. Then the agricultural income will be exempt
progressively. Once the agricultural income is fully exempt the balance of non- agricultural income
will be taxed according to the tax slab to which it belongs.
Agricultural Income is exempt from Income Tax. However, it is a factor in deciding the tax on non -
agricultural income of an assessee whose non - agricultural income exceeds the minimum taxable limit &
agricultural income exceeds Rs. 5000. Agricultural Income means: 1: Rent or revenue derived from land
which is situated in India & is used for agricultural activities.
2: Income derived from land by the performance of any process to render the product fit to taken into the
market.
Example: Ginning of cotton, curing of coffee etc....
3: Income derived from the building in the immediate vicinity of such land is agricultural income. But,
a: Building should be owned & occupied by the receiver of rent.
b: If building is situated in an urban area [a population of more than 10000 or 8km within the corporation
limit], then should be assessed to land revenue or local tax.
The following income though relating to land, are not agricultural income: 1: Income from markets.
2: Income from stone quarries. 3: Income from mining royalties.
4: Income from land used for storing agricultural products. 5: Income from supply of water for
irrigation purpose.
6: Income from fisheries.
7: Income from self-grown grass, trees & bamboos.
8: Remuneration received as Manager of an agricultural farm. 9: Dividend from a company
engaged in agriculture.
Important Definitions
1. Income. Income includes profits, dividends, perquisites, allowances, income from business or
profession, capital gains, winning from lottery etc. Generally, revenue receipts from outside are
treated as income.
2. Gross Total Income. Aggregate of assessable incomes under the heads salaries, house
property, business or profession, capital gains and other sources is called Gross Total Income.
3. Total Income. The balance left after deducting deductions under sections 80C to 80U from the
gross total income is called Total Income.
4. Person. It includes an Individual, Hindu Undivided Family, Company, Firm, Association of Persons,
Body of Individuals, Local Authority and Artificial Juridical Person.
5. Assessee. It means any person who is liable to pay tax, penalty, interest, etc. on his income
and/or on the income of somebody else.
6. Assessment Year. It means a period of twelve months beginning from 1st April and ending on
31st March.
7. Previous Year. It means financial year immediately preceding the assessment year.

PERMANENT ACCOUNT NUMBER (PAN)

A Permanent Account Number or PAN is a 10-digit unique identification alphanumeric number to
identify a taxpayer in India. All tax-related information of a person is regarded against this number which
acts as a primary key to store the information. No two people can have the same number.
A PAN card, a physical card which contains the tax payers’ name, date of birthday, and photograph, is
also allotted by the Income Tax Department whenever a PAN is issued. Your PAN Card is valid for
lifetime because it is unaffected by any change in address.
Structure of PAN:

Where to Apply for PAN Card?

• There are two platforms through which an individual can apply for a PAN in India: NDSL and
UTIITSL. Both organisations have been entrusted by the Income Tax Department.
• For a new PAN, Indian citizens and non-resident Indians need to fill Form 49A. Foreigners and
foreign entities need to fill Form 49AA. Along with the required documents, individuals
should submit the completely filled form to the Income Tax PAN Services Unit.
Advantages of PAN Card

1. A PAN card contains an individuals name, age and photograph thus can be used a valid
identity proof throughout the country.
2. A PAN simplified tracking assessees tax payments. If you do not have a PAN, you may be
required to pay tax multiple times since the tax payment cannot be verified.
3. A PAN is unique to every individual thus its misuse is almost impossible for the purposes of
tax evasion or other means.
4. A PAN card can be used to avail utilities like electricity, gas and internet connections to
your residential address.
5. Faster assessment and processing of refund
6. Control over unregulated and undisclosed transaction.
The Cost of PAN Application

• An individual can make an online application for his or her PAN card through the NSDL
website or the UTITSL portal. The cost of application for PAN card is as follows:
• For Indian communication address: Rs 93 (excluding GST)
• For foreign communication address: Rs 864 (excluding GST)
Exposure to applying for Pan online

Application for fresh allotment of PAN can be made through Internet. Further, requests for changes or
correction in PAN data or request for reprint of PAN card (for an existing PAN) may also be made
through Internet.

Steps involved:
1. Online application can be made either through the portal of NSDL(
https://tin.tin.nsdl.com/pan/index.html)or portal of
UTITSL(https://www.pan.utiitsl.com/PAN/index.jsp).
2. The charges for applying for PAN is Rs. 93 (Excluding Goods and Services tax) for
Indian communication address and Rs. 864 (Excluding Goods and Services tax) for foreign
communication address.
3. Payment of application fee can be made through credit/debit card, demand draft or net-
banking.

4. Once the application and payment is accepted, the applicant is required to send the supporting
documents through courier/post to NSDL/UTITSL.
5. Only after the receipt of the documents, PAN application would be processed by
NSDL/UTITSL.

For New PAN applications, in case of Individual and HUF applicants if Address for Communication is
selected as Office, then Proof of Office Address along with Proof of residential address is to be submitted
to NSDL w.e.f. applications made on and after 1st November 2009.
As per RBI guidelines, the entities making e-commerce transactions are required to provide PIN
(Personal Identification Number) while executing an online transaction. Therefore, before making
payment for online PAN/TAN applications using credit card / debit card / net banking, applicant is
required to obtain PIN from Banks whose credit card/debt card/net banking is being used.
Income Tax Rate & Slab for Individuals: Income tax slabs under the new tax regime

Income tax slabs Income tax rate

Rs 0 to Rs 3,00,000 0
 Rs 3,00,001 to Rs 6,00,000 5%
Rs 6,00,001 to Rs 9,00,000 10%
Rs 9,00,001 to Rs 12,00,000 15%
Rs 12,00,001 to Rs 15,00,000 20%
Rs 15,00,001 and above 30%
Cess at 4% will be levied on the amount of income tax payable. Surcharge will be applicable on incomes
above Rs 50 lakh.

Income tax slabs under the old tax regime

Income tax slabs Income tax rate
Rs 0 to Rs 2,50,000 0
Rs 2,50,001 to Rs 5,00,000 5%
Rs 5,00,001 to Rs 10,00,000 20%
Rs 10,00,001 and above 30%
The above income tax slabs table is applicable for individuals below 60 years of age. Cess at 4% will be
levied on the income tax amount payable.

Surcharge will be applicable on incomes above Rs 50 lakh.

Residential Status
1.8: Introduction:
An assessee may earn his income in India or outside India or at both the places. Which income is
assessable in India depends on the residential status of an assessee?
According to Sec 4 of IT Act, Income Tax is charged on the income of an assessee earned in the PY
according to the rates fixed by the "Finance Act". The tax liability is determined on the basis of his
residence in India in the PY.

Residential Status
Residential Status refers to a person's duration of stay in a country [India]. The Residential Status of an
assessee need not be the same in each year. Residential Status & Citizenship are different from each
other.
Residential Status

Resident Non – Resident(NR)

Ordinarily Resident (OR) Not Ordinarily Resident (NOR)

Determination of Residential Status:
For an Individual:
An individual becomes a Resident of India if he fulfills any one of the following two Basic Conditions.
A: Basic Condition:
1: He has been in India in the PY for a period of 182 days or more.
OR
2: He has been in India:
a: For at least 365 days during 4 years preceding the PY.
AND
b: At least 60 days in the PY.
Exceptions to Basic Condition 2:
In the following two cases only 1st Basic Condition is applicable.
a: An Indian citizen leaves India in the PY for the employment abroad.
b: An Indian citizen or a foreign citizen of Indian origin comes on a visit to India.
Note:
1: Person of Indian origin means either of his parents or any of his grand-parents was born in undivided
family in India.
2: Stay in India means his stay anywhere in India & at any time in India, need not be at a stretch. It
should be the total numbers of days his stay in India.
3: For calculating the number of days, date of entry & exit should be included.
If an individual fail to satisfy any one of the 2 Basic conditions, he is said to be a Non - Resident.

B: Additional Conditions:
To become an Ordinarily Resident of India, an individual has to satisfy any one of the Basic conditions
& also both the Additional Conditions.
The 2 Additional conditions to be fulfilled are:
1: He has been Resident in India in at least 2 out of 10 PYs preceding the relevant PY.
AND
2: He has been in India for at least 730days during 7years preceding the relevant PY.
When an individual satisfying the Basic Conditions but not satisfying any one or both of the Additional
Conditions then the individual is called Not - Ordinarily Resident of India.

Hindu undivided Family:

1. Resident: A HUF is said to be resident in India if control and management of its affairs is wholly or
partly situated in India.
2. Non - Resident: A HUF is non - resident in India if control and management of its affairs is wholly
situated outside India.
3. Ordinarily Resident: A HUF becomes Ordinarily Resident in the PY if the 'Karta' of the family
satisfies both Additional Conditions specified to individuals.
4: Not-Ordinarily Resident: If the Karta of the family satisfies any one of the Additional Conditions [of
an individual] the HUF becomes a Not - Ordinarily Resident.

Firms & Association of Person:

1: Resident: Firm or Association of persons is said to be Resident in India in any PY if the control
& management of its affairs is partly or wholly is situated in India in the PY.
2: Non - Resident: If the control & management of its affairs is situated wholly outside India during
the PY.

Companies:
1: Resident: A company is said to be a Resident in India in the PY if: a: It is an Indian Company
OR
b: During that year the control & management of its affairs is situated wholly in India.
2: Non - Resident: A company is said to be Non - Resident in India if: a: It is not an Indian
Company
OR
b: Its control & management is situated either wholly or partly outside India during that period.

1.8a: Problems relating to residential status

1. Mr. Amar left India for the first time on 5th March 2020 after having lived here for 22 years. He
returned India on 10th Sept. 2022. Find out his residential status for the AY 2024- 25.
Solution:
P.Y: 01.04.2022-31.03.2023
A.Y: 01.04.2023-31.03.2024
A: Basic Condition:
1: He has been in India in the PY for a period of 182 days or more.
P.Y: 01.04.2022-31.03.2023
No of days stayed during PY
01.04.2022-31.03.2023 = Full year
⁂ He satisfies the first basic condition and he becomes resident B: Additional Conditions:
1: He has been Resident in India in at least 2 out of 10 PYs preceding the relevant PY. 2: He has been in
India for at least 730days during 7years preceding the relevant PY.

01.04.2021-31.03.2022 = Sept+ Oct+ Nov+ Dec+ Jan+ Feb+ Mar

21 + 31 + 30 + 31 + 31 + 29 + 31 = 204 days
01.04.2020-31.03.2021 = 0 days (NR)
01.04.2019-31.03.2020 = 0 days (NR)
01.04.2018-31.3.2019
Apr+ May+ Jun+ Jul+ Aug+ Sept+ Oct+ Nov+ Dec+ Jan+ Feb+ Mar
30+31+30+31+31+30+31+30+31+31+28+5 =339 days
01.04.2017-31.03.2018 = 365 days R
01.04.2016-31.03.2017 = 365 days R
01.04.2015-31.03.2016 = 365 days R
01.04.2014-31.03-2015 =365 days R
01.04.2013-31.03.2014 = 365 days R
01.04.2012-31.03.2013 = 365 days R
01.04.2011-31.03.2012 = 365 days R
⁂ He satisfies the both Additional condition & thus becomes ordinarily resident

2. Mr. Girish an engineer left for France for employment on 14th August 2023 after serving in an Indian
firm for above 11 years. Find out his residential status for the PY .

Solution:
P.Y: 01.04.2023-31.03.2024
A.Y: 01.04.2024-31.03.2025
A: Basic Condition:

1: He has been in India in the PY for a period of 182 days or more.

P.Y: 01.04.2023-31.03.2024
01.04.2023-14-08-2023

Apr +may + Jun +July +Aug 30+31+30+31+14 = 136 days

⁂ He does not satisfy the first basic condition and second basic condition is not applicable
(exception – leaves India for employment purposes)

3. Mr. Gopal, an Indian Citizen working in Kuwait came to India on 28.09.2023 and stayed up to
26.03.2025 when he returned to Kuwait. Compute his residential status for the AY 2023-24.

Solution:
P.Y: 01.04.2023-31.03.2024
A.Y: 01.04.2024-31.03.2025

A: Basic Condition:
1: He has been in India in the PY for a period of 182 days or more.
P.Y: 01.04.2023 -31.03.2024
28.09.2023 -26.03.2024
Sept +oct +nov+ Dec.+ Jan.+ feb+ mar 3+31+30+31+31+28+26= 180days
⁂ He does not satisfy the first basic condition. thus, he becomes Non-resident

Note: In this problem the individual has to satisfy the first basic condition. we cannot solve the second
basic condition because the problem is exception to the rule 60 days or more Mr. Gopal comes India for
the first time for visiting purpose. z, he has to satisfy first basic condition.
4. Mr. Ramachandra an Indian citizen came serving in U.S.A since 2000 came to India for the first time
on 30.06.2017. He stayed here at stretch for 3 years and left Japan on 01.07.2020. He returned to India
on 01.04.2021 and remained in India till 31.07.2022 then he went back to
U.S.A. He again came to India taking an employment with an American Concern on 31.12.2023. What is
his residential status for the Assessment year 2023-24?
Solution:
P.Y: 01.04.2023-31.03.2024
A.Y: 01.04.2024-31.03.2025

A: Basic Condition:
1: He has been in India in the PY for a period of 182 days or more.
P.Y: 01.04.2023-31.03.2024
31.12.2023 - 31-03-2024
Dec+ Jan + Feb+ Mar 1+ 31+29+31 = 92 days
He does not satisfy the first basic condition

2: For at least 365 days during 4 years preceding the PY. At least 60 days in the PY.
01.04.2022 -31.03.2023
(01.04.2022-31.07.2023)
Apr +May +Jun +Jul
30+ 31+30+31= 122 days

01.04.2021 -31.03.2022 = 365 days

01.04.2020 - 31.03.2021
Apr +May +Jun + July 30+31+30 + 1 = 92 days

01.04.2019 – 31.03.2020= 365 days

01.04.2018 – 31.03.2019= 365 days
01.04.2017-31.03.2018 = 275 days
⁂ He satisfies the second basic condition and he becomes resident.

B: Additional Conditions:
1: He has been Resident in India in at least 2 out of 10 PYs preceding the relevant PY
 01.04.2022 - 31.03.2023 = 122 days
01.04.2021 - 31.03.2022 = 365 days
01.04.2020-31.03.2021 = 92 days
01.04.2019-31.03.2020 = 365 days
01.04.2018-31.03.2019 = 365 days
01.04.2017-31.03.2018 = 275 days
01.04.2016-31.03.2017 = 0days
01.04.2015-31.03.2016 = 0 days
01.04.2014-31.03.2015 = 0 days
01.04.2013-31.03.2014 = 0 days

⁂ He satisfies the first and second Additional condition. Thus becomes ordinarily resident.

5. Shakeel ,left India for the first time on 20.11.2016 for Higher studies in Australia. He stayed there up
to 04.12.2022 then he came back to India. Again, he went back to Australia on 01.04.2023 and came
back to India on 31.12.2023. Find out his residential status for the AY.
Solution:
P.Y: 01.04.2023-31.03.2024
A.Y: 01.04.2024-31.03.2025
1: He has been in India in the PY for a period of 182 days or more
P.Y: 01.04.2023-31.03.2024
(31.12.2023 - 31.03.2024)
1+31+28+31= 91 days
⁂ He does not satisfy the first basic condition

2: For at least 365 days during 4 years preceding the PY. At least 60 days in the PY.
01.04.2021 -31.03.2023
(04.12.2022 -31.03.2023)
28+31+28+31 = 119 days
01.04.2021 - 31.03.2022 = 0days
01.04.2020 - 31.03.2021 = 0days
01.04.2019 - 31.03.2020 = 0days
⁂ He does not satisfy basic conditions thus he becomes Non-resident

1.9: Scope of total income –Incidence of Tax Liability

The tax liability of an assessee depends on his Residential Status.

Rules:
Persons Ordinarily Resident in India:
U/S 5(1) the total income of an Ordinarily Resident in India includes the followings:
a: Income received or deemed to be received in India, whether accrued or arisen in India or outside.
b: Income which accruing or arising in India or deemed to accrue or arise in India, even if received
outside India.
c: Income which accrued or arisen outside India.

Persons Not – Ordinarily Resident in India:

The total income of such assessee includes the following:
a: Income received or deemed to be received in India, whether accrued or arisen outside India.
b: Income which accruing or arising or deemed to accrue or arise in India, even if received outside India.
c: Income which accrued or arisen or deemed to accrued or arisen outside in India from a business
controlled from India or a profession set up in India.

Persons Non – Resident of India:

The following incomes are taxable for Non – Resident of India:
a: Income received or deemed to be received in India, even if accrued or arisen outside India.
b: Income which accrues or arises or deemed to accrue or arise in India, even if received outside India.

Note:
1: The term received: Refers to the first receipt of the income.
2: Deemed to be received: Means the income has not actually been received, but is deemed to be
received.
3: Accrues or Arises: When the right to receive the income becomes vested in the assesse. 4: Deemed to
accrue or arise: Certain incomes are deemed to accrue or arise in India, even if they actually accrue or
arise outside India.

The chart given below- states the incidence of tax on income

Particulars OR NOR NR
a. Income received or deemed to be received Taxable Taxable Taxable
in India, accrued or
arose
anywhere
b. Income accrued or arose or deemed to Taxable Taxable Taxable
accrue or arise in India, received anywhere
c. Income accrued and received outside Taxable Taxable Not Taxable
India from business controlled in or a
profession set up in India
 d. Income accrued and received outside Taxable Not Taxable Not Taxable
India whether remitted to India or not
e. Past untaxed profits or income remitted Not Taxable Not Taxable Not Taxable
to India in the Previous year

INCIDENCE OF TAX LIABILITY

OR NOR NR
01. Salary received in India for services rendered Taxable Taxable Taxable
outside India.
02. Salary received outside India for services Taxable Taxable Taxable
rendered in India
03. Pension received outside India for services Taxable Taxable Taxable
rendered in India
04. Pension received in India for services rendered Taxable Taxable Taxable
outside India
05. Pension received outside India for service Taxable NT NT
rendered outside India.
06. Salary received outside India for services rendered Taxable NT NT
outside
India
(From Indian Co or Foreign Co.)
07. Income from agriculture lands i) In India. Exempt Exempt Exempt
ii) outside India. Taxable NT NT
08. Profit from purchase and sale of standing crop Taxable Taxable Taxable
in India.
09 Profit from purchase and sale of standing crop Taxable NT NT
outside India
10. Business income outside India and business is Taxable Taxable NT
controlled from In India
11. Business income, business in India, controlled
from outside India Taxable Taxable Taxable
12. Professional income, profession in India, setup Taxable Taxable Taxable
outside India.
13. Professional incomeoutside India and Taxable Taxable NT
profession is setup in India.
14. Foreign business or professional Taxable NT NT
income received and accrued outside India;
controlled
from set up outside India.
15. Rental income received in India accrued in India Taxable Taxable Taxable
or outside India.
16. Rental income from property situated outside Taxable Taxable Taxable
India, but received in India.
17. Rental income from property in India, received Taxable Taxable Taxable
 outside India
18. Rental income from property outside India, Taxable NT NT
received outside India.
19. Profit on sale of property situated in India, Taxable Taxable Taxable
received in India or outside India.
20. Profit from sale of property situated outside India i)
Received in India.
Taxable Taxable NT Taxable NT
ii) Received outside India. Taxable
21. Interest on POSB a/c a) in India. Exempt Exempt Exempt
b) Outside India. Taxable NT NT
22. Interest on bank deposits: a) accrued and received Taxable Taxable Taxable
in India
b) Accrued and received outside India.
Taxable NT NT
23. Interest on foreign branch of Indian bank
i) received in India Taxable Taxable NT Taxable NT
Taxable
ii)Received outside India.
24. Interest on Indian branch of foreign bank:
i) Received in India. ii)Received outside India Taxable Taxable Taxable
Taxable Taxable Taxable
25. Interest on foreign branch of foreign bank,
Accrued and received outside India. Taxable NT NT
26. Dividend from Indian companies, Taxable Taxable Taxable
Whether received in India or outside India
27. Dividend from foreign companies
i) Received in India Taxable Taxable NT Taxable NT
Taxable
ii)Received outside India
28. Interest on Indian Government. (central/ state) Taxable Taxable Taxable
securities.
29. Interest on foreign Government. securities
i) Received in India Taxable Taxable NT Taxable NT
Taxable
ii)Received outside India
30. Interest or dividend from co- operative societies
i) In India Taxable Taxable NT Taxable NT
Taxable
 ii)outside India
31. Interest on debentures from Indian companies
i) Received in India Taxable Taxable Taxable
Taxable Taxable Taxable
ii)received outside India
32. Interest on debentures from foreign
companies
Taxable Taxable NT Taxable NT
i) Received in India Taxable
ii)Received outside India
33. Gift from a friend
i) Received in India Taxable Taxable Taxable
 ii) Received outside India Taxable NT NT
Note: Exempt if the gifts in aggregate do not exceed Rs. 50,000.
34. Gift from relative (specified) whether received
in or outside India Exempt Exempt Exempt

1.9a: PROBLEMS ON INCIDENCE OF TAX LIABILITY

(1) The following are the incomes of Sri. Ram for the previous year
a. Profit from business in Iran received in IndiaRs.1,05,000
b. Income from House property in swizerland received in India Rs.500
c. Income from House property in Pakistan deposited in bank there Rs.1,000
d. Profit of business established in Pakistan deposited in a bank there Rs.20,000 (Out of 20,000 a
sum of Rs. 10,000 is brought to India) this business is controlled from India.
e. Accrued in India but received in England Rs.2,000
f. Profit earned from business in Kanpur Rs.6,00,000
g. Income from Agriculture in England – it is all spent on the education of children in England
Rs.5,000
h. Past untaxed foreign income brought to India during the previous year Rs.10,000 From the
above particulars ascertain the taxable income of Sri. Ram for the previous year if Sri. Ram is
(i) a resident
(ii) a not ordinarily resident
(iii) a non-Resident. (understanding) Solution:
Statement showing total taxable income
Particulars OR NOR NR
a) Profit earned in business in Iran received in India 1,05,000 1,05,000 1,05,000
b) Income from house property in Iran, received in India 500 500 500
c) Income from House property in Pakistan deposited in 1000 NT NT
bank there 1,000
d) Profit of business in Pakistan controlled in India 20000 20000 NT
e) Accrued in India but received in England 2000 2000 2000
f) Profit earned from business in Kanpur 6,00,000 6,00,000 6,00,000
g) Income from Agriculture in England 5000 NT NT
TAXABLE INCOME 7,33,500 7,27,500 7,07,500
NOTE: 1. It is profit earned and not brought into India that is taxable
2. Since the agricultural land is situated outside India agricultural income is taxable in the hands of
ordinarily resident
3. past untaxed foreign income brought into India in the previous year is not taxable as it does not relate
to the previous year
 (2) The following are the Income of Sri. Kishan Lal for the previous year
1. Income from Agriculture in Pakistan Rs.30,000
2 Income from salary received in India but the service was rendered in Iraq (computed)
Rs.12,000
3. Income from a business carried out in India Rs.12,000
4. Dividend from a Domestic company Rs.5000
5. Income earned and received from Bangladesh from Bank deposit there Rs.6000
6. Income from business in Ceylon but controlled from India and remitted to India Rs.14,000
Compute Sri. Krishna Lal’s gross total income if he is:
(i) a resident
(ii) not an ordinarily resident
(iii) a non-Resident
(understanding)
Particulars OR NOR NR
1. Income from Agriculture in Pakistan 30000 ------- -------
2. Income from salary received in India but 12000 12000 12000
the service was rendered in Iraq
3. Income from a business carried out in 12000 12000 12000
India
4. Dividend from a Domestic company 5000 5000 5000
5. Income earned and received from 6000 NT NT
Bangladesh from Bank deposit there
6. Income from business in Ceylon but 14000 14000 NT
controlled from India and remitted to India
Gross total income 79000 43000 29000

4. From the following particulars Compute total income of Mr Prakash if he is Ordinarily resident or
not ordinarily resident or non resident
• Salary received in India (including rupees 30,000 for the service rendered in Nepal) rupees
20,000
• income from business in Singapore controlled from India (rupees 40,000 was received in
India )rupees 1 lakh
• income from business in Kolkata managed from USA rupees 75,000
• income from profession in Kenya received their rs 150,000
• interest on uk govt security (of Which was received in India )Rupees 50,000
 • Income from property in Canada received outside India Rupees 1,25,000
• Profit on sale of building in India received in Sri Lanka Rupees 30,000
• income from house property in Pakistan deposited in bank there rupees 70,000
• agricultural income from Sri Lanka Rupees 60,000
• gift from friend received outside India rs 1 lakh 25,000
• Gift from a friend on the occasion of a marriage rupees 65,000
• past untaxed foreign income brought in India during previous year rupees 90,000

PARTICULARS OR NOR NR
Salary received in India 200000 200000 200000
income from business in Singapore 100000 100000 40000
controlled from India
income from business in Kolkata managed 75000 75000 75000
from USA
income from profession in Kenya received 150000 NT NT
their
interest on uk govt security 50000 25000 25000
Income from property in Canada received 125000 NT NT
outside India
Profit on sale of building in India received 30000 30000 30000
in Sri Lanka
income from house property in Pakistan 70000 NT NT
deposited in bank there
agricultural income from Sri Lanka 60000 NT NT
gift from friend received outside India 125000 NT NT
Gift from a friend on the occasion of a NT NT NT
marriage
past untaxed foreign income brought in NT NT NT
India
985000 430000 370000

3) Mr. Jeevan Shastri earns the following income during the previous year
a. Profit earned from a business in Bangalore managed from Singapore 2,25,000
b. Income from property in Ceylon received in India 10,000
c. Profit from the profession in Bangladesh deposited in Bank there 12000
d. Income from business in Ghana , controlled from India 14000
e. Dividend on Indian company shares received in mysore 10000
f. Profit on sale of building in India received in Hongkong 25000
Determine his taxable income if he is
(i) a resident
(ii) a not ordinarily resident
(iii) a non-Resident
(understanding) Solution:
Computation of incidence of tax liability
Particulars OR NOR NR
a) Profit earned from a business in Bangalore managed 2,25,000 225000 2,25,000
from Singapore
c) . Income from property in Ceylon received in India 10,000 10,000 10,000
d) Profit from the profession in Bangladesh deposited in 12,000 NT NT
Bank there
e) Income from business in Ghana, controlled from India 14,000 14,000 NT
f) . Dividend on Indian company shares received in 10000 10000 10000
Japan
g) Profit on sale of building in India received in 25,000 25,000 25,000
Hongkong
TAXABLE INCOME 296000 284000 284000

5. The following are the taxable income of Akash for the previous year.
a. Income from salary received in India for service rendered in London Rs.8000
b. Income from house property in Iran received in India Rs.1000
c. Dividend from an Indian company Rs.2000
d. Income earned and received in Afganisthanand deposited from bank deposits there Rs.6000
e. Profits of business established in Pakistan deposited in a bank there, this business is controlled from
India of Rs.20000.
f. Income accrued in Bhopal but received in Singapore Rs.6000.
g. Income from agriculture in England, it is all spent on the education of children in London
Rs.5000
h. Agricultural income received in india 10000
i. Interest on POSBa/c received in india 5000
j. Pension received in india for the service rendered outside india 20000
Compute the gross total income for the assessment year if he is:
 (i) Resident
(ii) Not ordinarily resident
(iii) Non resident
(Understanding)

Solution:
Computation of gross total income
Particulars OR NOR NR
1. Income from salary received in India for 8000 8000 8000
service rendered in London
2. Income from house property in Iran 1000 1000 1000
received in India
3. Dividend from an Indian company 2000 2000 2000
4. Income earned and received in Bangladesh 6000 NT NT
from bank deposits there
5. Profits of business established in Pakistan 20000 20000 NT
deposited in a bank there, this business is
controlled from India
6. Income accrued in Bhopal but received in 6000 6000 6000
Singapore
7. Income from agriculture in England, it is all 5000 NT NT
spent on the education of children in London
Agricultural income received in india Exempt Exempt Exempt

Interest on POSBa/c received in india 5000 5000 5000

Pension received in india for the service rendered 20000 20000 20000
outside india
Gross total income 73000 42000 42000
Multiple choice question

1) Which section of the Income Tax Act defines the residential status of an individual?
a. Section 2
b. Section 6
c. Section 10
d. Section 80C
Answer: b) Section 6
2) If an Indian citizen leaves India for employment during the financial year, what is
the minimum number of days he/she must stay in India to be considered a resident?
 a) 182 days
 b) 240 days
 c) 60 days
 d) 365 days
 Answer: a) 182 days

3) An individual who has been a non-resident for 2 years out of the previous 10 years is
considered:
 a) Resident and Ordinarily Resident (ROR)
 b) Resident but Not Ordinarily Resident (RNOR)
 c) Non-Resident (NR)
 d) None of the above
 Answer: b) Resident but Not Ordinarily Resident (RNOR)

4) The residential status of an individual is determined for:

 a) The previous year
 b) The assessment year
 c) Any financial year
 d) The calendar year
 Answer: a) The previous year

5) If a person visits India every year and stays for 150 days each year for 5 years, what
will be his residential status for the 6th year?
 a) Non-Resident (NR)
 b) Resident and Ordinarily Resident (ROR)
 c) Resident but Not Ordinarily Resident (RNOR)
 d) Resident
 Answer: a) Non-Resident (NR)

6) Which of the following is NOT a criteria for determining the residential status of an
individual?

 a) Number of days stayed in India

 b) Citizenship
 c) Purpose of visit
 d) Total income earned in India
 Answer: d) Total income earned in India

7) An individual is in India for 150 days in the current financial year and 400 days in the
previous 4 years. What is his residential status?
 a) Resident and Ordinarily Resident (ROR)
 b) Resident but Not Ordinarily Resident (RNOR)
  c) Non-Resident (NR)
 d) Resident
 Answer: c) Non-Resident (NR)

8) What is the significance of determining the residential status of an individual?

 a) To determine the applicable tax rate

 b) To ascertain the total income chargeable to tax in India
 c) To claim deductions under section 80C
 d) To file returns on time
 Answer: b) To ascertain the total income chargeable to tax in India

9) What does PAN stand for?

 a) Personal Account Number
 b) Permanent Account Number
 c) Public Account Number
 d) Private Account Number
Answer: b) Permanent Account Number

10) How many characters are there in a PAN card?

 a) 8
 b) 9
 c) 10
 d) 12
Answer: c) 10

11) Which entity issues the PAN card in India?

 a) Reserve Bank of India
 b) Ministry of Finance
 c) Income Tax Department
 d) State Governments
Answer: c) Income Tax Department
 12) What does the term "incidence of tax" refer to?

 a) The distribution of tax revenue among various government departments

 b) The study of the legal framework of taxation
 c) The economic impact of a tax on the distribution of income and wealth
 d) The process of collecting taxes
Answer: c) The economic impact of a tax on the distribution of income and wealth

FILL IN THE BLANKS

An individual is considered a resident in India if they stay in the country for at least _______________
days during the financial year.
Answer: 182
2. The incidence of tax liability in India is determined based on the _______________ status of an
individual.
Answer: residential
3. A _______________ card is a unique 10-digit identifier used for tax purposes in India.
Answer: PAN
4. Agricultural income is _______________ from tax in India.
Answer: exempt
5. An _______________ is a person who is liable to pay tax or file a tax return.
Answer: assessee
6. There are _______________ types of residential statuses for tax purposes in India.
Answer: 3
7. The incidence of tax liability for a non-resident is limited to _______________ income.
Answer: India-sourced
 7. A PAN card is mandatory for filing _______________ returns.
Answer: income tax

9. Agricultural income includes income from _______________ activities.

Answer: farming

10. An assessee can be an _______________ or a company or any other entity.

Answer: individual

11. To be considered a resident, an individual must have stayed in India for at least _______________
days in the preceding 4 years, among other conditions.
Answer: 365

12. The _______________ of an individual determines their tax liability in India.

Answer: residential status

13. *A PAN card is valid for _______________*.

Answer: lifetime

14. Agricultural income is exempt from tax only if it is derived from _______________ sources within
India.
Answer: agricultural

15. An assessee is required to file _______________ returns annually if their income exceeds the taxable
limit.
Answer: income tax
Answer the following questions (5 marks)
1. Mr. Girish an engineer left for France for employment on 14th August 2024 after serving in an
Indian firm for above 11 years. Find out his residential status ?
2. Mr. Gopal, an Indian Citizen working in Kuwait came to India on 28.09.2022 and stayed up to
26.03.2023 when he returned to Kuwait. Compute his residential status for the AY
3. Write a note on PAN?

4. Shakeel ,left India for the first time on 20.11.2017 for Higher studies in Australia. He stayed
there up to 04.12.2023 then he came back to India. Again, he went back to Australia on
01.04.2023 and came back to India on 31.12.2024. Find out his residential status for the AY

5. The following are the Income of Sri. Kishan Lal for the previous year
o Income from Agriculture in Pakistan Rs.30,000
o Income from salary received in India but the service was rendered in Iraq (computed)
 Rs.12,000
o Income from a business carried out in India Rs.12,000
o Dividend from a Domestic company Rs.5000
o Income earned and received from Bangladesh from Bank deposit there Rs.6000
o Income from business in Ceylon but controlled from India and remitted to India
Rs.14,000
Compute Sri. Krishna Lal’s gross total income if he is:
(i) a resident
(ii) not an ordinarily resident
(iii) a non-Resident

6. Mr. Jeevan Shastri earns the following income during the previous year
a. Profit earned from a business in Bangalore managed from Singapore 2,25,000
b. Income from property in Ceylon received in India 10,000
c. Profit from the profession in Bangladesh deposited in Bank there 12000
d. Income from business in Ghana , controlled from India 14000
e. Dividend on Indian company shares received in mysore 10000
f. Profit on sale of building in India received in Hongkong 25000
Determine his taxable income if he is
(i) a resident
(ii) a not ordinarily resident
(iii) a non-Resident
10 MARKS QUESTIONS
1. Mr. Amar left India for the first time on 5th March 2021 after having lived here for 22 years.
He returned India on 10th Sept. 2023. Find out his residential status for the AY

2. Mr. Ramachandra an Indian citizen came serving in U.S.A since 2000 came to India for the
first time on 30.06.2016. He stayed here at stretch for 3 years and left Japan on 01.07.2019. He
returned to India on 01.04.2020 and remained in India till 31.07.2021 then he went back to
U.S.A. He again came to India taking an employment with an American Concern on
31.12.2022. What is his residential status for the Assessment year 2023-24? (Knowledge)

3. The following are the taxable income of Akash for the previous year.
• Income from salary received in India for service rendered in London Rs.8000
• Income from house property in Iran received in India Rs.1000
• Dividend from an Indian company Rs.2000
• Income earned and received in Afganisthan and deposited from bank deposits there
Rs.6000
• Profits of business established in Pakistan deposited in a bank there, this business is
controlled from India of Rs.20000.
• Income accrued in Bhopal but received in Singapore Rs.6000.
• Income from agriculture in England, it is all spent on the education of children in
London Rs.5000
• Agricultural income received in india 1000
• Interest on POSB a/c received in india 5000
• Pension received in india for the service rendered outside india 20000
Compute the gross total income for the assessment year if he is:
(iv) Resident
(v) Not ordinarily resident
(vi) Non resident
6. From the following particulars Compute total income of Mr Prakash if he is Ordinarily
resident or not ordinarily resident or non resident
• Salary received in India (including rupees 30,000 for the service rendered in Nepal)
rupees 20,000
• income from business in Singapore controlled from India (rupees 40,000 was
received in India )rupees 1 lakh
• income from business in Kolkata managed from USA rupees 75,000
• income from profession in Kenya received their rs 150,000
• interest on uk govt security (of Which was received in India )Rupees 50,000
• Income from property in Canada received outside India Rupees 1,25,000
• Profit on sale of building in India received in Sri Lanka Rupees 30,000
• income from house property in Pakistan deposited in bank there rupees 70,000
• agricultural income from Sri Lanka Rupees 60,000
• gift from friend received outside India rs 1 lakh 25,000
• Gift from a friend on the occasion of a marriage rupees 65,000
• past untaxed foreign income brought in India during previous year rupees 90,000