Residential status and its relevance on taxability of income

Residential status and its relevance on taxability of income – H&R Block

Understanding Residential Status as per Income Tax Act.
February 5, 2015
H&R Block – Is amount received as expenses taxable or non-taxable?
March 3, 2015
Show all

Residential status and its relevance on taxability of income – H&R Block

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.

ClassificationResident and ordinary residentResident but not ordinary residentNon Resident
Indian IncomeTaxable in IndiaTaxable in IndiaTaxable in India
Foreign IncomeTaxable in IndiaPlease see NoteNot Taxable In India

Note: The following foreign income earned by a resident but not ordinary resident is taxable in India.

  1. Business income if business is wholly or partly controlled from India
  2. Income from profession which is set up 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.

H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

 Visit hrblock.in for more information or to find your nearest office.

HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

1 Comment

  1. Arun says:

    Interest earned on NRE FD for RNOR is taxable ?,please clarify .

Leave a Reply

Your email address will not be published. Required fields are marked *