Income arising in India is taxable irrespective of residential status of a person. However foreign income is taxable for Indian resident and fully exempt for non-resident. In this article, we explain when Indian income or foreign income is taxable as per Income Tax Act.
Taxability of an income depends upon two things i.e. residential status of an individual and country in which it is earned (Indian/ foreign Income). The following table will explain the relation between taxability of income and residential status.
|Classification||Resident and ordinary resident||Resident but not ordinary resident||Non Resident|
|Indian Income||Taxable in India||Taxable in India||Taxable in India|
|Foreign Income||Taxable in India||Please see Note||Not Taxable In India|
Note: The following foreign income earned by a resident but not ordinary resident is taxable in India.
It is clear from above that income earned in India is taxable irrespective of residential status of a person and foreign income is taxable for Indian resident and fully exempt for non resident. Foreign income (other than foreign income mentioned in note above) is also exempt for resident but not ordinary resident.
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