INCOME DEEMED TO ACCRUE/ARISE IN INDIA - Section 9
INCOME DEEMED TO ACCRUE/ARISE IN INDIA - Section 9
|
s.no. |
Type of income |
Rule applicable |
|
1 |
Salary
Income |
•
Salary income
is deemed to accrue/arise in India if the services are rendered in India.
Therefore, place of accrual of salary is the place
where work has been
done
by an employee. If any person has received any pension, such
pension shall be accruing/arising
in India if the employer is in India. •
Exception: Salary
payable by Indian
Government (Central Govt/State Govt) to an Indian citizen for services rendered outside India is
deemed to accrue/arise in India. However, all allowances &
perquisites received by such person
outside India are fully exempt
u/s 10(7). Eg,
Mr X is
a citizen of
India and is an IFS
officer. He is
posted in Indian embassy of Singapore. In this case,
his salary income
would be deemed
to accrue/arise in India even though services are rendered in Singapore. |
|
2 |
Income from any Property/ Asset |
Income from any property or asset (movable, immovable, tangible, intangible) is deemed to
accrue/arise in India
if such property/asset is situated in
India. Example - Mr
R, who lives
in London, has
a house property situated in India which has been given
by him on rent. Rent
derived by Mr
R shall be
taxable in India whether such
rent is received in India or
outside India. |
|
3 |
Income from Business Connection in India (Imp) |
# Business connection means
any activity undertaken in India in
relation to a business apart from the normal
foreign operations of the business (ie :business operations are being
undertaken in :India as 'well as
outside INDIA. ) # In any
business, many activities arc undertaken to 'earn profit. If 'any of those activities ere undertaken in India, then
it 'will be treated 'as business
connection in India. #Tax needs to be paid
in India on the profit earned due to
any activity carried out in India.
Business connection can
exist in the
form of: ❑ branch or agent; or ❑ subsidiary in India; or ❑ factory in India, etc # Business connection would exist if any non-resident has business outside India but he
has agent in
India who: a)
habitually secures orders in India
for the non-resident; or b) habitually maintains stock
of goods in India from
which he regularly delivers goods
to buyers on
behalf of the
non-resident; or c)
habitually concludes contracts on behalf
of the non-resident. # However, in case of non-residents, the following operations shell not be treated as business connection in India
and therefore income
from such operations shall not
be taxable: a)
The activity carried cut involves purchase of goods
in India for The purpose of export from
India and no
other activity whatsoever is carried out
in India. b)
A non-resident engaged in the
business of running a news agency
or publishing newspapers, etc if he undertakes collection of news end views
for transmission outside India (the newspaper should not be
sold in India/
the news should not be
broadcasted in India). c)
Shooting of
cinematographic films in
India by a non-resident provided the film is not
shown in India
and conditions listed
below are satisfied: (If the film is shown in
India, it would
amount to a business connection) ❑
Shooting is done by
non-resident individual: The
individual should not
be a citizen of India. ❑
Shooting is
done by non-resident firm: All the
partners should be
non- resident in India and
none of them
should be a citizen of
India. ❑
Shooting is done by non-resident company: All the shareholders should be non-resident in India
and none of
them should be
a citizen of
India. |
|
4 |
Income from Transfer of any Capital Asset |
Capital gains from the transfer of any capital
asset situated in India
would
be taxable in
India irrespective of the residential status of the assessee. Any share
or interest in
a company registered outside India shall
be deemed to be situated in India,
if the share
or interest derives, directly or indirectly, its value
from the assets
located in India
(Amendment carried out
with |
|
|
|
retrospective effect from
April 1, 1961 to overrule the judgement of Supreme
Court
in Vodafone's case). |
|
5 |
Interest (Consideration for Using Borrowed Money) |
•
Loan Used
by Indian Government (Central Govt/State Govt):
Interest paid by Indian Government on a loan
used by it
would always be
deemed to accrue/arise in India. (The Indian Government can use the
loan in India
or outside India) •
Loan Used
by an Indian
Resident (ROR/NOR): Interest paid by an
Indian resident on a loan used
by him would
always be deemed
to accrue/arise in India. However, where such loan is used by such resident
for business/profession carried on outside India
or for earning any income whose source is outside India, then such interest would not be
deemed to accrue/arise in
India. •
Loan Used by a Non-Resident: Interest paid by a non-resident would
be deemed to accrue/arise in India only
when such loan
is used by
such non- resident for business/profession carried on in India. |
|
6 |
Royalty (Consideration for Using Patent, Copyright, Know-how, Trademark, Design, etc) {Consideration for Use or Right to Use Computer Software is Also Included Within the Scope of 'Royalty') |
•
Patent,
Design, etc Used by Indian Government (Central Govt/State Govt): Royalty paid by
the Indian Government would always be
deemed to accrue/ arise in India.
(The Indian Government can use the patent, design, etc in India or outside India) •
Patent, Design,
etc Used by an Indian
Resident (ROR/NOR): Royalty paid by an
Indian resident would
always be deemed to accrue/arise in India.
However, where such patent, design, etc is used by
such resident for business/profession carried on
outside India or for earning any income whose source
is outside India, then such royalty would not be deemed to accrue/arise in India. . Patent, Design,
etc Used by a Non-Resident: Royalty paid by a non-resident would be deemed to accrue/arise in India only
when such patent, design, etc is used by
such non-resident for
business/ profession carried on in India
or for earning any income
whose source is in India. |
|
7 |
Fees
for Technical Services |
. Technical Services Used by Indian
Government (Central Govt/State Govt): Fees for technical services paid by the Indian
Government would always
be deemed to accrue/arise in India.
(The Indian Government can use the services in
India or outside India) •
Technical Services Used by an
Indian Resident (ROR/NOR): Fees for technical services paid by an Indian resident would always be deemed to accrue/arise in India. However,
where such services are used by such resident for business/profession carried on outside India
or for earning
any income whose source is
outside India, then
such fees for
technical services would not be
deemed to accrue/arise in India. •
Technical Services Used by a Non-Resident: Fees
for technical services paid by a non-resident would be deemed to accrue/arise in
India only when such services are used by such non-resident for business/profession carried on in India
or for earning any income whose
source is in India. |
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