Skip to content

CMA Intermediate · Direct and Indirect Taxation · Residential Status and Scope of Total Income

Mr. Iyer, a resident and not ordinarily resident (RNOR) individual, earned the following in the tax year: Rs. 3,00,000 from a business in Delhi, Rs. 2,00,000 from a shop in Dubai, controlled from Chennai, and Rs. 1,50,000 as interest from a Dubai bank, received in Dubai. What is the amount includible in his total income under section 5?

The includible amount is Rs. 5,00,000. An RNOR is taxed on Indian income of Rs. 3,00,000 and on foreign business income controlled from India, Rs. 2,00,000. The Dubai bank interest accrues and is received outside India and is not business income controlled in India, so it is excluded.

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

Explanation

For an RNOR, Indian income is taxed (Rs. 3,00,000). Foreign income is taxed only if derived from a business controlled in India: the Dubai shop, controlled from Chennai (Rs. 2,00,000). Dubai bank interest received abroad is excluded. Total = 3,00,000 + 2,00,000 = Rs. 5,00,000.

Did you get it right without looking?

One question tells you little. A timed set on Residential Status and Scope of Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Residential Status and Scope of Total IncomeFree diagnostic mock

More Residential Status and Scope of Total Income questions