Residential Status and Basic of Income Tax CA IPCC TAXATION – Part 1
who earn the income or held the property will pay tax, income tax, wealth tax
Indirect tax: consumer or user of goods or services will
pay tax earlier excise, custom, vat, service tax now GST.
Previous year: year in which income is accrue, due or earn. First
p. y. starts from 1st day of business commencing to 31st
march and subsequent year always from 1st April to 31st
Assessment year: year in which income is assessed and liability will be determined. It always commences 1st April and ends on 31st march.
Each year as double role example:
16-17 is assessment year of 15-16
16-17 is previous year of 17-18
Rule: income of previous
year taxable in a relevant assessment year because below mentioned person may not be traceable during assessment year.
Exception of the above rule:
Nonresident from shipping
Short term duration of business
Person leaving India permanently or for long duration
Alienate of assets for evasion of tax
2(31) person includes:
INDIVIDUAL, HUF FIRM, AOP OR BOI, LOCAL AUTHORITY ARTIFICIAL JUDICIAL PERON
Residential Status and Basic of Income Tax CA IPCC TAXATION – Part 2
Tax incidence due to residential status.
INDIVIDUAL AND HUF can be:
1 resident and ordinary resident 2 only resident
3 non- resident
FIRM, AOP OR BOI,
LOCAL AUTHORITY ARTIFICIAL JUDICIAL PERON can be
1 only resident
2 non- resident
INDIVIDUAL: he will be resident if satisfy any one of the following
Only 182 days apply in following cases:
Indian origin or citizen coming India for visit purpose only
Indian citizen leaves India for employment purpose only.
Indian origin means either of the parents or grandparents born
in undivided India (before independence 1947 will be considered)
Indian or foreign citizen will be given in question
It has no relevance with residential status.
Once individual becomes resident then for ordinary resident he must
satisfy following both conditions
LIVING IN INDIA IS RQUIRED NOT NECESSARY AT SAME PLACE.
DAY OF ENTERING AND LEAVING INDIA IS CONSIDERED ON THE HOURLY BASIS.
HINDU UNDEIVIDED FAMILY:
Once HUF is resident then for the status of ordinary resident
consider the status of Karta.
Indian income taxable to all
(OR, R AND NR)
Indian income includes:
accrued in India
place in India,
Asset in India
service provided in India.
Deemed to accrued in India – business Connection
Received in India – directly received
Deemed to receive in India – deposited in PF Account or TDS account
For ordinary resident whole world income taxable
Business connection: branch office India for purchase or sale of goods.
Agent in India for purchase or sale of goods
Subsidiary formed for selling of the products
Exception of business connection:
Part of the operation in India
Only purchase goods for export.
News and views
Shooting of cinema
Other than above all will be included in foreign income
Accrue and received both outside India it will be foreign income.
Business or professions set up and control from India – taxable to OR as well as R.
Remittance will not be taxable to all as it is already taxed in the year of accrual.
Royalty, technical fees and interest:
Recipient is non-resident:
Payer if government in India – accrued in India hence taxable
Payer if resident in India – if used in India then accrued
in India hence taxable, otherwise it is not chargeable.
Payer if non-resident in India – if used in India for business purpose then accrued in India hence taxable. But used in India for other purpose and outside India for any purpose it is not taxable.