Incomes Taxable in India

Resident status wise incomes taxable / not taxable in India

Nature of incomeResidential status
Resident and ordinarily residentResident but not ordinarily residentNon-resident
Income which accrues or arises in IndiaTaxedTaxedTaxed
Income which is deemed to accrue or arise in IndiaTaxedTaxedTaxed
Income which is received in IndiaTaxedTaxedTaxed
Income which is deemed to be received in IndiaTaxedTaxedTaxed
Income accruing outside India from a business controlled from India or from a profession set up in IndiaTaxedTaxedNot Taxed
Income other than above (i.e., income which has no relation with India)TaxedNot TaxedNot Taxed

Incomes deemed to be received in India

Following incomes are deemed to be received in India:

  1. Interest credited to recognized provident fund account of an employee in excess of 9.5% per annum.
  2. Employer's contribution to recognized provident fund in excess of 12%.
  3. Transferred balance in case of reorganization of unrecognized provident fund.
  4. Employers' Contribution to the account of the employee in case of notified pension scheme referred to in section 80CCD.

Incomes deemed to accrue or arise in India

  1. Capital gain arising on transfer of property situated in India.
  2. Income from business connection*

    * Business connection shall include following business activities carried out by a a person acting on behalf of a non-resident:

    1. If such person has and habitually exercises authority in India to conclude limited to contract for purchase of goods or merchandise on behalf of such nonresident);
      or
    2. If such person has no authority to conclude contracts but he habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident;
      or
    3. If such person habitually secures orders in India mainly or wholly for the nonresident or for other non-residents under the same management.

    No business connection shall be deemed to have been established, if the business is carried on through an independent broker, general commission agent or other agent, provided such person is working in his ordinary course of business.

  3. Income from salary in respect of services rendered in India.
  4. Salary received by an Indian national from Government of India in respect of service rendered outside India. However, allowances and perquisites are exempt in such cases.
  5. Income from any property, asset or other source of income located in India.
  6. Dividend paid by an Indian company.
  7. Interest received from Government of India.
  8. Interest received from a resident is treated as income deemed to accrue or arise in India in all cases, except where such interest is earned in respect of funds borrowed by the resident and is used for carrying on business/profession outside India or is in respect of funds borrowed by the resident and is used for earning income from any source outside India.
  9. Interest received from a non-resident is treated as income deemed to accrue or arise in India if such interest is earned in respect of funds borrowed by the nonresident for carrying on any business/profession in India.
  10. Royalty/fees for technical services received from Government of India.
  11. Royalty/fees for technical services received from resident is treated as income deemed to accrue or arise in India in all cases, except where such royalty/fees relates to business/profession/other source of income carried on by the payer outside India.
  12. Royalty/fees for technical services received from non-resident is treated as income deemed to accrue or arise in India if such royalty/fees is received for business/profession/other source of income carried on by the payer in India.

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