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

Mr. Rohan Das, a non-resident, had these items in tax year 2026-27: (i) salary of Rs 5,00,000 for services rendered in Nepal, paid and received in Nepal; (ii) interest of Rs 2,00,000 on a loan given to an Indian resident, used for business in India, received in Nepal; (iii) dividend of Rs 1,00,000 from a foreign company, received in Nepal. Which amount is chargeable to tax in India?

Only Rs 2,00,000 is taxable in India. A non-resident is taxed on income received in India or accruing or deemed to accrue in India. The interest on a loan used for Indian business is deemed to accrue in India, while the Nepal salary and foreign dividend are outside scope.

  1. ARs 8,00,000
  2. BRs 3,00,000
  3. CRs 2,00,000Correct
  4. DRs 7,00,000

Explanation

A non-resident is taxed only on income received or deemed received in India, or accruing or arising or deemed to accrue in India. The Nepal salary for services outside India and the foreign dividend received abroad do not qualify. Interest on a loan used for business in India is deemed to accrue in India, so Rs 2,00,000 is taxable even though received in Nepal. Adding the dividend (Rs 3,00,000) wrongly treats it as Indian.

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