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

Mr. Vikas Jain, a resident and not ordinarily resident in tax year 2026-27, had the following income: business profit of Rs 9 lakh from a Dubai business controlled from India, received in Dubai; profit of Rs 4 lakh from a London business controlled from London, received in London; and Rs 1 lakh of interest from an Indian company received in London. What is the income taxable in India?

Rs 10 lakh is taxable. A resident but not ordinarily resident is taxed on income accruing in India and on foreign income from a business controlled from India. So Rs 9 lakh Dubai profit and Rs 1 lakh Indian interest are taxable, while the London business profit of Rs 4 lakh is excluded.

  1. ARs 5 lakh
  2. BRs 10 lakhCorrect
  3. CRs 14 lakh
  4. DRs 9 lakh

Explanation

A resident but not ordinarily resident is taxed on Indian income plus foreign income from a business controlled from India. The Dubai business profit (Rs 9 lakh) is controlled from India and so is taxable. The Indian company interest (Rs 1 lakh) accrues in India and is taxable even though received abroad. The London profit of Rs 4 lakh is foreign income of a business controlled outside India and is not taxable. Total is Rs 10 lakh. Option C taxes all income wrongly.

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