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

Under the Income-tax Act, 2025 (applicable from the June 2027 session), the total income of a person who is a resident includes income from whatever source derived that falls in which of the following categories?

A resident is taxed on income received or deemed received in India, income accruing or arising in India, and income accruing or arising outside India. A not ordinarily resident is taxed on foreign income only when it comes from a business controlled in, or profession set up in, India.

  1. AOnly income received in India in the tax year
  2. BIncome received or deemed received in India, income accruing or arising in India, and income accruing or arising outside India (subject to the not ordinarily resident restriction)Correct
  3. COnly income accruing or arising in India, whether actual or deemed
  4. DOnly foreign income that is remitted to India during the tax year

Explanation

Section 5(1) taxes a resident on income received or deemed received in India, income accruing or arising (or deemed to) in India, and income accruing or arising outside India. For a not ordinarily resident, the foreign income is taxed only if derived from a business controlled in or a profession set up in India. The other options narrow the scope wrongly.

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