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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Kestrel Global Ltd., a foreign company, has its place of effective management in India for the tax year. It earned ₹40 lakh from business carried on in India and ₹60 lakh from a business carried on abroad, the latter received in a foreign bank account. Ignoring deductions, what income is within the scope of Indian tax for the year?

The taxable scope is ₹1 crore. Because the foreign company's place of effective management is in India, it is resident and taxed on worldwide income, so Indian income of ₹40 lakh and foreign income of ₹60 lakh are added together.

  1. A₹40 lakh
  2. B₹60 lakh
  3. C₹1,00,00,000Correct
  4. D₹20 lakh

Explanation

Being resident through place of effective management in India, the company is taxable on its global income, wherever accruing or received. Scope = 40 + 60 = ₹100 lakh. Option A treats it as non-resident and ignores foreign income; option D wrongly subtracts 40 from 60.

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