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CS Executive · Tax Laws and Practice · Basic Concept of Income Tax

Ms. Iyer, a resident and ordinarily resident, earns Rs. 3,00,000 of income that accrued outside India, and it has already been included in her total income on the basis that it accrued. The same sum is later remitted and received in India. How is it treated under the Income-tax Act, 2025?

The Rs. 3,00,000 is not included a second time. Once income has been included in total income on the basis that it accrued or arose, it cannot be included again on the basis that it is received in India, so it is taxed only once.

  1. AIncluded again as income received in India, doubling the charge
  2. BNot included again on the receipt basis, since it was already included as accruedCorrect
  3. CIncluded only if she becomes not ordinarily resident
  4. DExcluded from total income altogether because it was foreign income

Explanation

Section 5(4) says income already included in total income on the basis that it accrued or arose, or is deemed to have, is not included again on the basis that it is received or deemed received in India. So the Rs. 3,00,000 is taxed once. Option A ignores this rule and option D ignores that a resident is taxed on foreign accrual.

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