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CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources

Ms. Sneha is a not ordinarily resident in India. During the tax year she earned ₹30,000 as interest on a bank deposit in London, credited and kept abroad, and ₹50,000 as interest from an Indian company, credited in India. What is the amount of these two incomes includible in her total income under section 5 of the Income-tax Act, 2025?

₹50,000 is includible. The Indian interest accrues and is received in India, so it is taxable for any resident. The London interest accrues outside India and, for a not ordinarily resident person, is taxed only if derived from a business controlled or profession set up in India, which it is not.

  1. A₹80,000
  2. B₹30,000
  3. C₹50,000Correct
  4. DNil

Explanation

Under section 5(1)(c), foreign income of a not ordinarily resident is included only if derived from a business controlled in or a profession set up in India. The London interest is neither, so it is excluded. The ₹50,000 accrues in India and is received in India, so it is included.

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