The incidence of tax depends upon the residential status of an assessee. Discuss fully.

Tax Incidence of an Assessee:

The total income of an assessee will be different depending upon whether he is

  1. Resident,
  2. Not ordinarily resident,or
  3. Non-resident.

Section. 5 specifies the income which are chargeable to tax in different cases as follows:

Resident: A person who is Resident in India, shall be charged to tax in respect of the following incomes:

  • Income received or deemed to be received in India in the previous year by or on behalf of such person; whether accrued or arisen in India or not, or
  • Income accrued or arisen or deemed to accrue or arise to him in India during previous year, whether received in India or outside, or
  • Income accrued or arisen outside India, during the previous year.

Not -Ordinarily Resident: The total income of a person who is a not ordinarily resident for the previous year includes all income from whatever
source derived which:

  • Is received or is deemed to be received in India in the previous year by or on behalf of such person whether accrued or arisen within or outside India, or
  • Accrues or arises or is deemed to accrue or arise to him in India during previous year whether received in India or outside India, or
  • Accrues or arises to him outside India from a business controlled in or a profession set up in India.

Non -Resident: The total income of a person who is non-resident for the previous year includes all income from whatever source derived which:

  • Is received or deemed to be received in India by or on behalf of such person whether accrued or arisen within or outside India, or
  • Accrues or arises or is deemed to accrue or arise in India during previous year to him whether received in or outside India.

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