The taxability of income of
any person in India is generally based on his / her Residential Status and
scope of total income determined based on the said Residential Status under the
Income-Tax Act, 1961 (IT Act) and Double Tax Avoidance Agreement (DTAA) entered
between India and country of residence of the said person.
Further, the scope of total
income which is chargeable to tax in India based on the Residential status of
the individual, is explained below:
*Please note a person who qualifies as a Deemed
Resident of India is considered as RNOR under the IT Act and their scope of
total income is determined in the same manner as RNOR, as explained above.
Refer FAQ
no. 4 of Chapter 13 on “Residential Status” for conditions to qualify as
“Deemed Resident”.
The tax liability of various incomes as
explained above can be easily understood by the way of the below mentioned
table:
|
Sr. No
|
Particulars
|
Residential
Status
|
|
ROR
|
RNOR
|
NR
|
|
1.
|
Income earned from any source
in India is taxable in India. E.g.:
Ø Interest
from Investments in India;
Ø Capital
Gains/Dividend from shares and investments in India;
Ø Income
from Immovable Property located in India;
|
Taxable
|
Taxable
|
Taxable
|
|
2.
|
Any
other income earned or received in India is taxable in India
|
Taxable
|
Taxable
|
Taxable
|
|
3.
|
Income
earned outside India from business controlled or profession set-up in India
is taxable in India
|
Taxable
|
Taxable
|
Not
Taxable
|
|
4.
|
Income earned outside
India
|
Taxable
|
Not
Taxable
|
Not
Taxable
|
Key Points to be kept in mind:
If income of a person is taxed in India based on his residential
status as explained above and the same income is also taxed in other country,
then appropriate benefit/relief/credit of taxes paid on such income in either
country can be claimed while paying taxes in the other country as per DTAA
between India and other country.
For slab rates applicable in case of taxable income earned by a NR please refer FAQ
no. 5 of Chapter -14 TDS
and Tax
Liability in India.
For rates of taxes and withholding tax rates (i.e. tax deducted at
source, TDS rates) applicable to NR please refer FAQ no. 7 of Chapter -14 TDS and Tax Liability
in India.
Updated 02/2024