Assessment of Various Income Types for Residents and Non-Residents

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The solution presented details the assessment of different types of income for residents, non-residents, and non-ordinary residents as per Income Tax laws. It covers scenarios like salaries drawn outside India, profits earned abroad, dividends received, and more. The scope of taxable income based on residency status is explained through specific examples provided.

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CLASS III B.COM SUBJECT INCOME TAX TOPIC - SCOPE OF TOTAL INCOME BY Dr.K.Sharifa Nizara

SCOPE OF TOTAL INCOME Particulars Resident Resident Non resident But Not ordinary Resident 1.Income received or deemed to be received in India irrespective of the income being accrued or earned in India or outside India. 2.Income earned in India, whether received, paid in India or outside India Taxable Taxable Taxable Taxable Taxable Taxable 3. Income earned and received outside India from a business controlled or profession setup in India. Income may or may not be remitted to India Taxable Taxable Not Taxable

Particulars Resident Resident But not ordinary resident Non resident 4.Income received or accrued or earned outside from a business controlled or profession setup outside India. 5.Income received or earned or accrued outside India from any other source salary, house property, capital gains and income from other source 6. Income earned and received outside India during the year preceding the previous year and remitted to India during the previous year Taxable Not Taxable Not Taxable Taxable Not Taxable Not Taxable Not Taxable Not Taxable Not Taxable

Short Notes : Resident, Resident But Not Ordinary Resident and Non Resident - Taxable Income received/ earned / accrued in India Income deemed to be received in India Income from business in India and services rendered in India Resident and Resident But Not Ordinary Resident - Taxable Income Earned, received outside India business controlled in India Resident Taxable Dividend from an foreign company

Problem no. 19 P,no 1.68 Show how the following incomes are to be assessed in the hands of an assessee who is (a) resident (b) non resident and (c) not ordinary resident Particulars a) Salary drawn during the year for employment outside India from Government of India b) Salary drawn for employment in London office of an Indian company for three months c) Profits earned abroad and received in India Rs. 93,500 18,000 25,000 d) Profit earned from business transaction outside India & kept in bank there e) Dividend received from an Indian company 18,000 3,000

Solution : COMPUTATION OF TOTAL INCOME Particulars Resident Resident Non Resident But Not Ordinary Resident 93,500 a) Salary income drawn outside India from Government of India b) Salary drawn for employment in London (Outside India) c) Profits earned abroad and received in India d) Profit earned and received outside India e) Dividend received from an Indian company Total Income 93,500 93,500 18,000 NIL NIL 25,000 25,000 25,000 18,000 NIL NIL NIL NIL NIL 1,54,500 1,18,500 1,18,500

Problem no. 20 P,no 1.68 Following are the incomes of Sri Amarnath for the financial year 2019- 20 Particulars a)Interest on savings bank deposit in Allahabad bank, Delhi Rs. 1,200 b)Income from agriculture in Africa invested in Nepal 10,000 c) Dividend received in U.K from an American company, a part of which Rs.2,000 remitted to India 10,000 d)Pension computed received in Belgium for services rendered in India with a limited company 20,000 You are required to compute his gross total income for the assessment year 2020-21 if he is (i) a resident (ii) Not ordinary resident or (iii) Non - resident

COMPUTATION OF TOTAL INCOME Particulars Resident Resident Non resident But Not ordinary Resident 1,200 a)Interest on savings bank deposit in Allahabad bank, Delhi b)Income from agriculture in Africa invested in Nepal c) Dividend received in U.K from an American company, a part of which Rs.2,000 remitted to India d)Pension computed received in Belgium for services rendered in India with a limited company Total Income 1,200 1,200 10,000 nil nil 10,000 nil nil 20,000 20,000 20,000 41,200 21,200 21,200

Problem no. 21 P,no 1.68 Following are the incomes of Sri.Rathnam for the previous year 2019-20 Particulars a) Profit from business in Bangalore b)Income accrued in India but received in Japan c)Profit from business in Canada but received in India d) Income from house property in Karachi received in Bombay e) Profit from business established in England and deposited there, the business being controlled from India f) Income from house property in America and deposited there g) Past untaxed income brought into India during the previous year Compute the total income of Sri.Rathnam for the assessment year 2020- 21. If he is (a) resident (b) non resident and (c)not ordinary resident Rs. 10,000 4,000 5,000 4,000 20,000 2,000 10,000

COMPUTATION OF TOTAL INCOME Particulars Resident Resident Non resident But Not ordinary Resident 10,000 4,000 5,000 a)Profit from business in Bangalore b)Income accrued in India but received in Japan c)Profit from business in Canada but received in India d) Income from house property in Karachi received in Bombay e) Profit from business established in England and deposited there, the business being controlled from India f) Income from house property in America and deposited there g) Past untaxed income brought into India during the previous year Total Income 10,000 4,000 5,000 10,000 4,000 5,000 4,000 4,000 4,000 20,000 20,000 nil 2,000 nil nil nil nil nil 45,000 43,000 23,000

Problem no. 22 P,no 1.69 The Following are the incomes of Mr.Salman for the previous year 2019- 20 Particulars a)Profit on sale of machinery in Bangalore but received in Australia b)Profit from business in Canada, the business being controlled from India (one third is received in India) c) Income from house property in Iran d) Agriculture income in England and was received there but later on brought into India e) Past untaxed foreign income brought into India during the previous year 2019 -20 compute the total income of Mr.Salman for the assessment year 2020-21 if he is (i) a resident (ii) Not ordinary resident or (iii) Non - resident Rs. 30,000 42,000 20,000 8,000 6,000

COMPUTATION OF TOTAL INCOME OF MR.SALMAN Particulars Resident Resident Non resident But Not ordinary Resident 30,000 a) Profit on sale of machinery in Bangalore but received in Australia b)Profit from business in Canada, the business being controlled from India Rs.42,000 (i) one third is received in India = 42,000 X 1/3 =14,000 (ii) Remaining two third received in Canada = 42,000 X 2/3 = 28,000 c) Income from house property in Iran d) Agriculture income in England and was received there but later on brought into India 30,000 30,000 14,000 14,000 14,000 28,000 20,000 8,000 28,000 - - - - -