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CA Intermediate · Taxation · Residential Status and Scope of Total Income

Kavita Joshi is a resident and ordinarily resident in India for tax year 2026-27. During the year she earned: (a) Rs 3,00,000 interest from a bank in London, received in London and not remitted to India; (b) Rs 2,00,000 business profit from a business in Nepal controlled from Mumbai, received in Nepal; (c) Rs 1,50,000 rent from a house in Pune, received in Pune. What income is taxable in India?

Rs 6,50,000 is taxable. A resident and ordinarily resident is taxed on worldwide income regardless of where it accrues or is received. So the London interest of 3,00,000, the Nepal business profit of 2,00,000 and the Pune rent of 1,50,000 all fall in total income.

  1. ARs 1,50,000
  2. BRs 3,50,000
  3. CRs 5,00,000
  4. DRs 6,50,000Correct

Explanation

A resident and ordinarily resident is taxed on global income. The London interest (Rs 3,00,000), the Nepal business profit (Rs 2,00,000) and the Pune rent (Rs 1,50,000) are all taxable. Total = 3,00,000 + 2,00,000 + 1,50,000 = Rs 6,50,000. Rs 1,50,000 or Rs 3,50,000 wrongly treats her as non-resident or not ordinarily resident, who are not taxed on foreign income received abroad. Rs 5,00,000 omits the Pune rent.

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