Taxtion Law Unit II
Taxtion Law Unit II
Income earned and received Not Taxable Not Taxable Not Taxable
outside India in the years
preceding the previous year
and is remitted to India during
the previous year .
Receipts Vs Remittance
The term “receipt” of income refers to
where the income is received first.
Remittance means, the recipient has received
the amount and then remitted or transmitted
to other place.
The place/country where the amount is
received or is made under the control of the
recipient, is the place of receipt.
Eg:
a) Salary of a person credited to his Bank in Bangalore.
Earned and received in India
b) Salary of a person working in Dubai, is credited to his
Bank account in Dubai- received in Dubai
c) Salary of a person working in Dubai, the employer
has credited the amount to the employees Bank
account in Mumbai – received in India
d) Salary of a person working in Dubai, credited to his
bank account in Dubai, but later he has transferred to
his Bank account in Bangalore – Received in Dubai.
Exempted Incomes
Following incomes are exempted from tax and therefore need not be
considered while computing the total income.
1) Agricultural income in India
2) Share of income from a partnership firm
3) Share of income from an HUF
4) Gift –i) from relatives fully exempted
ii) Non-relatives, aggregate amount up to Rs.
50,000 is exempted in a year. If exceeds Rs.50000, the
whole amount is taxable.
5) Dividend from Indian companies up to Rs. 10 lakh. The amount
exceeding Rs. 10 lakh is taxable at 10% + sc if applicable + cess
6) Interest on post office savings bank account up to Rs. 3500 in the case
of individual account and up to Rs.7000/- in case of joint account.
Illustration 1
Following are the income of Mr. Jagadeesh for
the previous year 20-21. Compute his gross
total income for the A.Y. 21-22 if he is;
i)An ordinarily resident,
ii) Not ordinarily resident,
iii) Non- Resident.
1) Profit from business in England, received in India
Rs.1,50,000.
2) Profit from business in England Rs.2,00,000 received
there, the business is controlled from India.
3) Profit from a business in England received there
Rs.2,00,000.
4) Share of profit from a partnership firm in India Rs.60,000.
5) Income from House property in India received in England
Rs.1,80,000.
6) Dividend from an Indian company Rs.30,000.
Solution
Computation of Gross Total Income of Mr. Jagadesh for the
A.Y. 20-21
Particulars Ordinarily Not ordinarily Non Resident
resident resident
Profit from Business in England 1,50,000 1,50,000 1,50,000
received in India
Profit from business in England 2,00,000 2,00,000 -
received there, business is
controlled from India
Compute his Gross Total Income for the A.Y. 21-22, if he is;
1) An Ordinarily resident,
2) Not ordinarily resident,
3) Non resident.
Solution
Sl. No Particulars OR NOR NR
Amt.in Rs Amt. in Rs. Amt.inRs.
X, a foreign national, furnishes the following particulars of his income relevant for the previous year 2019-20.
1) Profit on sale of plant at London (one-half is received in India)- Rs.1,46,000
2) Profit on sale of plant at Delhi (one-half is received in London)- Rs.1,02,000
3) Salary (after standard deduction) from an Indian company in London (one-half is paid for rendering service in India)-
Rs.60,000
4) Interest on UK Development Bonds (entire amount is received in London)- Rs.40,000
5) Income from property in London received there- Rs.30,000
6) Income from agriculture in London received there, half of which is used for meeting hostel expenses of X’s son in
England and remaining amount is later on remitted to India – Rs. 25,000
7) Dividend received in London on May 6, 2019 from a company registered in India but mainly operating in UK-
Rs.17,000
8) Profit from a business in Delhi managed in India – Rs,49,000
9) Rental income from a property in Nepal deposited by the tenant in a foreign branch of an Indian bank operating
there – Rs.12,000
10)Gift in foreign currency received on September 20, 2019 from a friend (one-third of which is received in India and
remaining amount is received outside India and utilised for meeting education expenses of X’s son in USA
Rs.3,70,000
11)Determine Gross Total Income of X for the assessment year 2020-21; if he is;
a) An Ordinarily Resident,
b) Not ordinarily Resident,
c) Non Resident.
Answer. Ordinarily resident – Rs.649000. Not Ordinarily Resident – Rs.439000. Non resident - Rs.439000.