Unit 1st

Income Tax Act 1961: Chapters, Objectives, Features,

Provision

What is the Income Tax Act 1961?

The Income Tax Act 1961 is the set of rules and regulations upon which the Income Tax

Department levies, administers, collects and recovers taxes. It contains 298 sections,

23 chapters and several important provisions which contain all the aspects of taxation in

India.

Now, the nature of the Income Tax Act 1961 can be classified into – direct and

indirect taxes. The taxpayer must pay direct taxes at a certain percentage based on

his/her income. While the latter is levied by the government indirectly during the sale of

goods and services.

Main Objectives of Income Tax Act 1961

The main objectives of the Income Tax Act 1961 are as follows:

• Price Stability

The IT Act maintains price stability in the economy by laying out regulations for direct

taxes. It serves as a measure to control private spending, thereby keeping a check on

the inflation of commodity prices.

• Full Employment
This Act reduces the income tax rates in order to promote higher demand for goods and

services. This, in turn, leads to increased employment opportunities, thus fulfilling the

objective of full employment.

• Non-Revenue Objective

A higher tax rate is applicable for wealthy people compared to the poor. In this way, the

Income Tax Act encourages a progressive taxation system that addresses the

inequality in wealth among its citizens, carrying out its non-revenue objective.

• Cyclical Fluctuations Control

When there is an economic boom, the income tax rates are increased, while in times of

recession, it is reduced. In this way, the Act maintains control over cyclical fluctuations

in the value of money.

• Reducing Balance of Payment Issues

The Income Tax Act imposes customs duties on the import of certain goods. This helps

encourage the domestic production of goods, thereby reducing the balance of payment

difficulties for the authorities.

Features of Income Tax Act 1961

Some of the salient features of the Income Tax Act 1961 are as follows:

• Income tax is a form of direct tax that needs to be borne by the taxpayer. It cannot

be transferred to another individual.

• The Central Government of India controls this form of taxation.

 • It is applicable to the taxpayer's income which was earned in the previous year.

• Tax calculation is applicable based on the assessee’s income tax slab.

• The government levies a progressive income tax rate so that rich and

economically powerful individuals have to pay taxes at higher rates.

• Deductions apply to a maximum limit per financial year in certain cases.

Background
The scripts of the system of taxation trace its roots to the ancient texts of Arthashastra and
Manusmriti. In earlier days, various sections of the population in the country would pay taxes on
gold, silver, and other agricultural items. The basic taxation system in the country takes these
ancient texts as its parent. The taxation system includes taking up the basic ideas from the ancient
texts. The basic idea of this taxation system was laid by the British officials. One of the most
important elements of the taxation system is income tax. Income tax was introduced in this system
by Sir James Wilson, in the year 1860. Since the time India gained its independence, these
elements of taxation are seen as a weapon to decrease the disparity of incomes among different
sections of the population in the country. The Indian constitution made the income tax rule. It is the
tax paid out of the total income earned by an individual, which is needed to be paid by each
individual.

Types of income tax

Income taxes can be marginal, moderate, or proportionate. Income tax in India
is divided into two types:

Direct taxes
Direct taxes are those that are charged immediately on the income received.
Individuals and corporations are subject to direct taxes. These taxes cannot be
passed on to future generations. The income tax is the most important sort of
Direct tax for individual taxpayers like you. This tax is levied once a year
throughout the assessment year (1st April to 31st March). According to the
Income Tax Act of 1961, you must pay income tax if your yearly income
exceeds the minimal exemption level. Various parts of the Act provide for tax
breaks. Before we discuss tax breaks, it is critical that you grasp the income tax
bracket. In India, direct taxes make for over half of all government revenue.
Income tax, however, is not the sole direct tax. In India, there are three sorts
of direct taxes: income tax, capital gains tax, and corporate tax.

Income tax is levied on all income earned by individuals and HUFs, with the
exception of capital gains and earnings from business and professions. The
appropriate slab rates for the Assessment Year are used to calculate income
tax. The slab rates are announced by the national government in the annual
budget.

Indirect taxes
In contrast, indirect taxes are those that are received on your behalf and
remitted to the Indian government. Businesses that are subject to indirect taxes
include e-commerce firms, theatres, and any services for which you are
required to pay tax. Indirect taxes are those that are placed on goods and
services. They vary from direct taxes in that they are placed on products rather
than individuals who pay them directly to the Indian government. Instead, they
are imposed on items and collected by an intermediary, the individual selling
the commodity. Sales taxes, taxes placed on imported products, Value Added
Tax (VAT), and other minor indirect taxes are examples. These taxes are levied
by adding them to the price of the product or service, which is likely to raise the
price of the product.

Need for the Income Tax Act

The primary source of income for the government is taxes. The revenue
generated by taxes is used to cover government expenses such as education,
infrastructure amenities such as roads and dams, and so on. Taxes are collected
for the fundamental aim of generating adequate income for the state. Taxes
have come to be seen as a tool by which the economic and social ideals of a
welfare state may be attained. As a result, the Income Tax Act of 1961 became
necessary.

Applicability of the Income Tax Act, 1961

The Income Tax Act of 1961 applies to the entire country of India. The Income
Tax Act addresses:

• The basis for charging revenue.

• Income that is not subject to income tax.
 • Income computation under multiple categories.
• Income grouping.
• Losses are set off and carried forward.
• Allowable deductions.
• Rebates and tax breaks.
• In certain exceptional circumstances, taxation is determined.
• Dividends paid by domestic corporations are subject to taxation.
• Income Tax Authorities and their Authorities.
• Surveillance, search, and seizure.
• Procedures for assessing.
• Tax collection and recovery, as well as tax deduction at source (TDS).
• Advance tax payment.
• Reimbursement.
• Revisions and appeals.
• Immovable property acquisitions.
• Punishment and prosecution.

Purpose of the Income Tax Act

The Income Tax Act’s goals can be described as follows:

• To reduce income and wealth distribution inequalities.

• To accomplish the twin goals of better yields.
• To quicken the pace of the country’s economic growth and
development.
• To preserve appropriate economic stability and security of long-term
inflationary pressures and short-term foreign price fluctuations.
• To make funds available for economic development.
• Minimize excessive wealth, income, and consumerism inequality
through indeterminate productivity gains, offence, justice, and peace
and stability.
• To encourage the purchase of new capital goods.
 • To direct investment toward the industries that yield the most to
growth in the economy.

Assessee- Section 2(7)

According to Section 2(7) of the Income Tax Act of 1961, an assessee is a
person who is required to pay taxes under any provision of the Act. The term
‘assessee’ refers to somebody who has been evaluated for his income, another
person’s income for which he is assessable, or the profit and loss he has
experienced. A person or an individual under any provision of this Act is referred
to as an assessee.

They may also be referred to as each and every person for whom:

• Any processes under the statute for the assessment of his income are
now underway;
• Income of another individual for which he is liable to be taxed;
• Any loss incurred by him or any other person, or
• A person who is eligible for a tax refund.
Understanding the definition of a person is vital because an assessee is a person
who pays a specific amount to the government.

According to the Income Tax Act, they are grouped into the following
categories:

1. Normal assessee: A normal assessee is a person who is required to

pay taxes on income generated during the fiscal year. In addition, any
individual who is required to pay interest or penalties to the
government or is entitled to a refund under the act is termed a typical
assessee.
2. Assessee representative: A person who is obligated to pay taxes on
income or losses caused by a third party. It usually occurs when the
individual obligated to pay taxes is a non-resident, a juvenile, or a
lunatic.
3. Deemed assessee: A person who is legally obligated to pay taxes. It
can be anybody who is regarded to be an assessee under the Act or
anyone for whom an action has been brought under the Act to assess
the income/loss of any other person in respect of whom he is
assessable or the amount of refund due to him or such other person.
 Furthermore, this group includes a person who pays taxes on behalf of
another person in certain circumstances.
4. Assessee-in-default: Individuals become assessees in default when
they fail to satisfy their statutory obligations of paying tax. For
example, before paying his employees, an employer should deduct tax
from their pay. Furthermore, the employer is required to pay deducted
taxes to the government on time. If, however, the employer fails to
deposit this tax, he becomes an assessee-in-default.

Assessment- Section 2(8)

Assessment under Section 2(8) is a process of assessing the validity of the
assessee’s claimed income and computing the amount of tax payable by him,
followed by the practise of imposing that tax responsibility on that individual.

Assessment year – Section 2(9)

An “Assessment year” is defined in Section 2(9) as “twelve months beginning on
the first day of April each year.” Every year, an assessment year commences on
April 1st and finishes on March 31st of the following year. For instance, the
Assessment year 2021-22 is a one-year period beginning on April 1, 2020, and
concluding on March 31, 2021. In an assessment year, the assessee’s income
from the previous year is taxed at the rates specified in the appropriate Finance
Act. As a result, it is also known as the “Tax Year.”

Income – Section 2(24)

Section 2(24) of the Income Tax Act defines income as including the following:

1. Salaries: Any salary, wages, annuity, pension, gratuity, or other payment received
by an individual from his employer is considered as income for taxation purposes.
2. Income from House Property: Any rental income earned from a house property,
or the deemed rental income from a self-occupied property, is considered as
income.
 3. Profits and Gains of Business or Profession: Any profits or gains earned by an
individual from a business or profession is considered as income for taxation
purposes.
4. Capital Gains: Any profits or gains earned from the sale of a capital asset, such
as property or shares, is considered as income.
5. Income from Other Sources: Any income earned from sources other than those
mentioned above, such as interest on bank deposits, lottery winnings, or gifts, is
considered as income.
6. Winnings from Lotteries, Crosswords, and Other Games: Any winnings from
lotteries, crossword puzzles, races, card games, or any other games or gambling
activities are considered as income.
7. Contribution to Employees’ Provident Fund (EPF) Account: Any contribution
made by an employer to an employee’s EPF account is considered as income.
8. Voluntary Retirement Scheme (VRS) Compensation: Any compensation received
by an employee under a VRS is considered as income.
9. Foreign Income: Any income earned by an individual outside India is also
considered as income for taxation purposes.

Exclusions from the definition of Income

While the above-mentioned sources of income are considered as income for taxation
purposes, there are some exclusions from the definition of income, such as:

1. Agricultural Income: Any income earned from agricultural land is exempted from
taxation under Section 10(1) of the Income Tax Act.
2. Income of a Charitable Trust or Institution: Any income earned by a charitable
trust or institution is exempted from taxation under Section 11 of the Income Tax
Act.
3. Income from a Hindu Undivided Family (HUF): Any income earned by an HUF is
taxed separately from the income of its individual members.
What is Section 2(31) of the Income Tax Act?
Section 2(31) of the Income Tax Act defines the term “person” to include the following
entities:

1. An individual: This includes a natural person who is a resident or non-resident of

India.
2. A Hindu Undivided Family (HUF): An HUF is a family consisting of all persons
lineally descended from a common ancestor, including their wives and unmarried
daughters.
3. A company: This includes any Indian company, as well as any foreign company
that has a place of business in India, whether directly or through an agent.
4. A firm: This includes any partnership firm or limited liability partnership (LLP).
5. An association of persons (AOP) or a body of individuals (BOI): This includes any
group of two or more persons who come together for a common purpose, such
as a club, society, or trust.
6. Any local authority: This includes any municipality, panchayat, or other local
government body.
7. Every artificial juridical person: This includes any entity that is not a natural
person or a HUF, such as a trust, society, or association.

Meaning of Capital AssetsThe term' capital asset' has been defined in Section 2(14) of the
Income-tax Act. It means:

• Property of any kind held by an assessee, whether or not connected with his business or
profession.
• Any securities held by an FII which has invested in such securities in accordance with the
SEBI Regulations.
• Any unit-linked insurance policy to which exemption under Section 10(10D) does not apply
on account of applicability of the fourth and fifth proviso [High premium equity oriented
ULIPs].

Inclusions in capital asset

All kinds of property, whether movable, immovable, tangible, or intangible, including rights of
management or control of an Indian company, is a capital asset.

Exclusions from capital assets

The following assets are excluded from the definition of 'Capital Assets'.
(a) Stock-in-trade

Any stock-in-trade, consumable stores, or raw material held for the purpose of business or profession
have been excluded from the purview of a capital asset. Any surplus arising from the sale of stock-in-
trade or raw material or consumables is taxable as business income under the head 'Profits and Gains
from Business or Profession'.

(b) Personal effects

Movable property held for the personal use of the assessee, or any member of his family dependent
on him, is not treated as a capital asset. For example, wearing apparel, furniture, car, scooter, TV,
refrigerator, musical instruments, gun, revolvers, generators, etc., are personal effects.

However, the following assets, even if they are meant for personal use, shall not be considered as
personal effects, and any gain arising from their sale shall be charged to tax:

i. Jewellery including:

• Ornaments made of gold, silver, platinum, or any other precious metal or any alloy containing
one or more such precious metals, whether or not worked or sewn into any wearing apparel.
• Precious or semi-precious stones, whether or not set in any furniture, utensil, or other article
or worked or sewn into any wearing apparel.

ii. Archaeological collections.

iii. Drawings

iv. Paintings

v. Sculptures

vi. Any work of art.

(c) Agricultural land in India

Agricultural land situated in any rural area in India is not treated as a capital asset. Agricultural land
situated beyond the jurisdiction of a municipality or cantonment board having a population of 10,000
or more is not treated as a capital asset if it does not fall within the following distances (to be
measured aerially):

1. Up to 2 km from the local limits of the municipality or cantonment board, if the population of
such municipality or cantonment board exceeds 10,000 but does not exceed 1,00,000.
2. Up to 6 km from the local limits of the municipality or cantonment board if the population of
such municipality or cantonment board exceeds 1,00,000 but does not exceed 10,00,000.
3. Up to 8 km from the local limits of the municipality or cantonment board if the population of
such municipality or cantonment board exceeds 10,00,000.

(d) Bonds

Following Bonds have been excluded from the purview of capital assets:

1. 6.5% Gold Bonds, 1977

 2. 7% Gold Bonds, 1980
3. National Defense Gold Bonds, 1980
4. Special Bearer Bonds, 1991
5. Gold Deposit Bonds issued under Gold Deposit Scheme, 1999
6. Deposit certificates issued under the Gold Monetisation Scheme, 2015

What s Set Off of Losses

Set-off loss means deducting the losses against any other profits of the same financial
year. In other words, reducing the taxable Income against such losses saves taxes. Even If
losses are not set off against income or profits in the same year in which losses were
incurred, they can be carried forward to the future assessment years (with some limitation
and set off against income of subsequent years). Intra-head set-off and Inter-head set-off
are two types of set-offs.

• Intra-head set off

• Inter-head set off

• Intra-Head Set Off of Losses

• Intra-Head Set Off of Loss allows taxpayers to set off losses from income
from one source against income from another source under the same head
of income. For example, if a taxpayer has a business loss from one source of
income, they can set it off against the profit from another business source of
income under the same head.

What are the exceptions to Intra-head set off?

 • Losses from the speculative business can only be set off against the income
from the speculative business. And cannot be set off against income from
any other businesses.

• Losses from owning and maintaining horse races can be set off against
income from owning and maintaining horse races.

• Long-term capital losses can only be set off against long-term capital gains.

• Short-term capital losses can be set off against long-term and short-term
capital gains.

• Losses from the specified business can only be set off against profit from the
specified business. However, losses from other professions and businesses
can be set off against profit and income from specified businesses.

• Loss from the exempted source of income cannot be adjusted against

taxable income, E.g., Agricultural income is exempt from tax; hence, if the
taxpayer incurs a loss from agricultural activity, then such loss cannot be
adjusted against any other taxable income

Inter-head Set off of Losses

After adjusting the Intra-head set-off losses, the remaining losses can be set off against
income from another head within the same financial year. For example, losses incurred
from house property can be set off against income from salary. However, Speculative
Business loss, Specified business loss, Capital Losses, and Losses from owning and
maintaining racehorses cannot be set off against any other head of profit and income.

What is the carry forward of losses?

After adjusting the Intra-head set-off and inter-head set-off against the income of the same
financial year, there could still be some losses remaining, or there is not enough income or
profit to adjust the losses in that particular financial year. Losses can be carried forward to
the future assessment years and set off against the income of those years.

Rules to carry forward losses

• Losses under Income from house property

• If losses under house property are not fully adjusted in the same financial
year in which losses were incurred, they can be carried forward to the next 8
years. Such losses can be adjusted only against income from house property
and can be carried forward even though ITR is filed after the due date
{Section 139(1)}.

• Losses from Non-speculative Business

If losses under business or profession (Non-speculative business) are not fully adjusted in
the same financial year in which losses were incurred, they can be carried forward to the
next 8 assessment years. Such losses can be adjusted only against income from business
or profession and can only be carried forward if the ITR is filed on or before the due date as
per {Section 139(1)}. It is not necessary that the business from which such loss is incurred
should be in continuance to carry forward losses.

• Losses from speculative business

If losses under speculative business are not fully adjusted in the same financial year in
which losses were incurred, they can be carried forward to the next 4 assessment years.
Such losses can be adjusted only against income from the speculative business and can
only be carried forward if the ITR is filed on or before the due date {Section 139(1)}. It is not
necessary that the business from which such loss is incurred should be in continuance to
carry forward losses.
 • Losses under specified Business (35AD)

If losses under specified business are not fully adjusted in the financial year in which losses
were incurred, they can be carried forward to infinite numbers of years. Such losses can be
adjusted only against income from the specified business under 35AD and can only be
carried forward if the ITR is filed on or before the due date {Section 139(1)}.

• Losses from capital gain

• If not fully adjusted in the financial year in which losses were incurred, capital losses
can be carried forward to the next 8 assessment years.

• Long-term capital losses can only be adjusted against income from the LTCG. i.e.,
Long term capital gains.

• Short-term capital losses can be adjusted against both LTCG and STCG, i.e., Long
term capital gains and Short-term capital gains.

• It can only be carried forward if the ITR is filed on or before the due date {Section
139(1)}.

• Losses from owning and maintaining racehorses

Losses under racehorses can be carried forward for the next 4 financial years if not fully
adjusted in the previous year in which losses were incurred. Such losses can be adjusted
against income from owning and maintaining racehorses and can only be carried forward if
the ITR is filed on or before the due date {Section 139(1)}.
What is an agricultural income in India?

As per Section 2 (1A) of the Income Tax Act, agricultural income can be defined as
follows:

(a) Any rent or revenue derived from land which is situated in India and is used for
agricultural purposes.

(b) Any income derived from such land by agriculture operations including processing of
agricultural produce to render it fit for the market or sale of such produce.

(c) Any income attributable to a farmhouse** subject to the satisfaction of certain

conditions specified in this regard in section 2(1A). Also, any income derived from
saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

Following are not agriculture income:-

• Breeding of Livestock.
• Poultry Farming
• Fisheries
• Dairy farming

(d) Income earned from commercial use of agricultural use

Income from a farmhouse is exempt from tax if it meets certain criteria defined in
section 2(1A) of the Income Tax Act:

• - The farmhouse should be situated on or near the agricultural land, and

• - The agricultural land should not fall within the specified area, which is:

Population
Aerial distance from municipality

Within 2 km 10,000 to 1,00,000

Within 6 km 1,00,000 to 10,00,000

 Population
Aerial distance from municipality

Within 8 km > INR 10,00,000

What is the taxability of agricultural income in India?

In India, agricultural income is treated differently from other types of income for tax
purposes. As per the Income Tax Act, agricultural income is exempt from income tax
and is not included in the total income while calculating tax liability.

How much agricultural income is exempt from income tax?

There is a complete tax rebate on agriculture income in these cases:-

1. If your total agricultural income is less than Rs. 5,000 p.a.;

2. If the income from agricultural land is the only source of income, i.e., no other
income;
3. Where you have both agricultural income and other income and if the total income
excluding such agricultural income is less than the basic exemption limit.

But, in case your agricultural income exceeds Rs. 5,000, and you have other sources of
income too, then the tax liability for that year is to be calculated as follows and
applicable to Individual, HUF, AOP\BOI, Artificial Juridical Person.

1. Compute income tax on the aggregate income (i.e., agricultural income + other
income) as per the prevailing income tax rates (without surcharge and cess)
2. Compute income tax on the sum of the amount of basic exemption limit plus
agricultural income as per the prevailing income tax rates (without surcharge and
cess)
3. Now, Compute (1) – (2) to arrive at the tax liability for the year. (add surcharge if any,
add cess)
RESIDENT AND NON RESIDENT

1. Resident: An individual is considered a resident in India for income tax purposes if they meet any
of the following conditions during the financial year (April 1 to March 31):

a. The individual is present in India for 182 days or more in the financial year.

b. The individual is present in India for 60 days or more in the financial year and has been present for
365 days or more in the four financial years immediately preceding the relevant financial year.

2. Non-Resident: An individual who does not meet the criteria for being a resident is classified as a
non-resident for income tax purposes. Non-residents are subject to different tax rules, and their
taxation is typically limited to income earned or accrued in India.

Additionally, there is a category known as “Not Ordinarily Resident” (NOR) in India, which applies to
individuals who do not qualify as a resident in India as per the basic criteria but have certain economic
interests in India. NOR status has certain tax advantages compared to non-resident status.

Introduction
Section 6 of the Income Tax Act 1961 talks about the Residential Status.
Residential status of a person means that whether the particular person is entitled
to pay the income tax in India or not?

Classification of Residential Status

As per the depending stay of the individual in India, Income Tax Law has classified
the residential status into three categories.

Residential status of an individual will cover the financial year of an individual and
as well as his/her previous years of stay.

There are the following categories which classified the residential status of an
individual.

1. Resident (ROR)
2. Resident but Not Ordinarily Resident (RNOR)
3. Non Resident (NR)
. Resident and Ordinarily Resident (ROR)
Under Section 6(1) of the Income Tax Act an Individual is said to be resident in
India if he fulfils the condition:

If he/she stay in India for a period of 182 days or more in a financial year, or He/
She is in India for a period of 60 days or more in a financial year and If he/she
stays in India for a period of 365 days or more during the 4 years immediately
preceding the previous year.

As per section 6(6) of Income Tax Act, 1961 there are following two conditions
when an individual will be treated as the “Resident and Ordinarily Resident” (ROR
in India.

1. If He/ She stays in India for a period of 730 days or more during the 7
years of preceding previous year.
2. If He/ She stays in India for at least 2 out of 10 previous financial years
which is preceding the previous years.
If the individual doesn’t satisfy either of the condition, then he is no eligible to
qualify as Resident and Ordinarily Resident (ROR).

Points which are essential while calculating ROR

• It is not mandatory that assessed should stay at the same place and it
is not mandatory that stay should be a continuous period of time which
means it shouldn’t be on a regular basis.
• Territorial of India includes territorial water, continental shelf, and
airspace which is up to twelve nautical miles.
• When any person visits India then their calculation of resident in India
will be counted through their physical presence in India. And these
physical presences will be counted on an hourly basis. If any dispute
arises while calculating their physical presence, then the day on which
he comes to India and the day on which he leaves India shall be taken
into consideration while calculating the Residential status.
Let’s understand the ROR with an example:

Suppose Mr. Nayar who is a resident of India who went to another country in
October 2018 while he had stayed in India during the financial year (2018-19) is
for a period of 250 days which is exceeding the 182 days and his stay in previous
7 financial years is more than 730 days then he is eligible for paying the tax in
India. That’s why the income of Mr. Nayar will be taxable in nature because he is
fulfilling the condition of ROR.

Resident but Not Ordinarily Resident (RNOR)

An individual will be treated as RNOR when an assessee fulfill the following basic
conditions:

In a financial year if an individual stays in India for a period of 182 days or more;
Or He/ she stays in India for a period of 60 days in a financial year and 365 days
or more during the 4 previous financial years.

However, an Assesse will be treated as a Resident but Not Ordinarily Resident

(RNOR) if they satisfy one of the basic condition which is as follows:

1. If He/ She stays in India for a period of 730 days or more during the 7
preceding financial year or;
2. If He/ She was a resident of India for at least 2 out of 10 in the previous
financial year.
Let’s understand Resident but Not Ordinarily Resident with an example:

Suppose Mr. Nayar who is in the Financial year 2017-18 stayed in India for a
period pf 192 days so he was fulfilling the condition No 1 but He didn’t stay in
India for more than 730 days during the period of 1st April 2010 to 31st March
2011 which was immediately preceding the Financial Year 2017-18. So in this
situation, Mr. Nayar will be qualified for a Resident but Not Ordinarily Resident
(RNOR).

Non – Resident (NR)

An individual will be qualified for Non Resident (NR) if He/ She satisfies the
following conditions which are as follows:

1. In a financial year if an Individual stay in India for less than 181 days
and
2. In a financial year If an Individual stay in India for not more than 60
days
 3. If an Individual stay in India which exceed 60 days in a financial year
but doesn’t exceed the 365 days or more during the 4 previous financial
years.

What are the steps required to Calculate the

Residential Status of an Individual?
• First, we check whether the Individual is falling under the category of
exceptions for the basic conditions or not?
• After that, we check that whether they are satisfying the basic condition
of 182 days of more or not? if they are satisfying then he will be treated
as a resident otherwise he will be non–resident.
If an Individual is not fulfilling the above condition, then we apply both the
condition and if he satisfies any of the basic condition takes then he is said to be
a Resident.

CLUBBING OF INCOME

As the term suggests, clubbing of income means adding or including the

income of another person (mostly family members) to one’s own income. This
is allowed under Section 64 of the IT Act. However, certain restrictions
pertaining to specified person(s) and specified scenarios are mandated to
discourage this practice.

Specified persons to club income

Income of any and every person cannot be clubbed on a random basis while
computing total income of an individual and also not all income of specified
person can be clubbed. As per Section 64, there are only certain specified
income of specified persons which can be clubbed while computing total
income of an individual.
Specified scenarios when you can club income
Specified Specified Income to be
Section person scenario clubbed

Transferring
money without
transferring
assets,
whether Any income from
through a such an asset will be
Section Any contract or pooled in the
60 person otherwise transferor’s hands.

Transferring Any income from

an asset with such an asset will be
Section Any the possibility pooled in the
61 person of revocation. transferor’s hands.

Income will be pooled

in the hands of the
parent who earns
more.
Note: If the kid’s
parents’ marriage
does not last, the
income of the parent
who is responsible for
the minor child in the
Any money
preceding year will be
derived from
combined. If a
or accruing to
parent’s income is
your minor
combined with that of
child,
a minor child, the
including both
parent is entitled to
stepchildren
Rs. 1,500
and adopted
exemption.Exceptions
children. Even
to the clubbing of a
minor married
disabled child’s
daughters are
income (disability of
subject to
the nature specified in
Section clubbing
section 80U)Earnings
64(1A) Minor child restrictions.
from the child’s
 manual labor or
activities requiring the
application of his skill,
talent, or specialized
knowledge and
experience
A significant child’s
earnings. This would
also include earnings
from investments
made with funds
given to the adult kid
as a gift. Money given
to an adult child is
also excluded from
gift tax if it is given to
a relative.’

The income of the

If your spouse taxpayer or spouse
receives any whose income is
income from higher is combined
any firm in (before clubbing). The
which you exception to clubbing:
have a If the spouse has
substantial technical or
interest*, professional
regardless of qualifications in
its regard to any income
nomenclature, derived by the
such as spouse, and that
salary, income is solely
commission, attributable to the
fees, or any application of his or
other form and her technical or
through any professional
means, i.e., knowledge and
Section cash or in- expertise, clubbing is
64(1)(ii) Spouse** kind, not attracted.

Section
You have The income from
64(1)(iv) Spouse**
made a direct such an asset is
 or indirect pooled in the
transfer of transferor’s hands. If
assets to your the asset isn’t a
spouse for house, of course.
insufficient
There are certain
consideration.
exceptions to the
clubbing rule. In the
following
situations, there is
no revenue pooling:
a. When an asset is
distributed as part of
a divorce settlement

b. If the property is
transferred prior to
marriage

c. There is no
husband and wife
relationship on the
date of income
accrual.

d. The spouse
purchases an asset
with pin money (i.e.
an allowance given to
the wife by her
husband for her
personal and usual
household expenses)

Transfer of
assets to your
daughter-in- Any revenue
law, either generated by the
directly or transfer of such
indirectly, for assets is pooled in
Daughter- insufficient the hands of the
64(1)(vi) in-law consideration transferor.
 Transferring
any assets,
whether
directly or
indirectly, for
an insufficient
compensation
to any
individual or
group of
people to The revenue from
benefit your these assets will be
Any daughter-in- counted as your
person or law, either income and will be
association immediately or accumulated in your
64(1)(vii) of person in the future. hands.

Transferring
any assets,
whether
directly or
indirectly, for
an insufficient
compensation
to any
individual or
group of The revenue from
people to these assets will be
Any benefit your counted as your
person or spouse, either income and will be
association immediately or accumulated in your
64(1)(viii) of person in the future. hands.

In the event
that a HUF
member
transfers or
converts his or The income from
her personal such converted
property to property will be
Hindu HUF for pooled and
Section Undivided insufficient distributed to
64(2) Family compensation, individuals.
What is the written down value method? Section 32
WDV or written down value method of depreciation of an asset is arrived at
after accounting for an asset’s depreciation or amortisation. In short, WDV is
the current value of the asset.

Why is written down value method of depreciation calculated?

Due to wear and tear of an asset, there might be a loss in the value of the asset
over time. Section 32 of the Income Tax Act of 1961, deals with such
depreciation in the value of an asset. WDV method of depreciation is
calculated for tax purposes and the Act allows calculation for both, tangible
(such as building, factory plant, machinery) and intangible assets (trademarks,
patents, franchise).

So how does calculating WDV depreciation help? Know that if an asset is used
for over 180 days, a 50% depreciation is allowed for the year. It is not required
that the asset has to be mandatorily used in the previous year. If the asset was
leased to the lessee, the assessee can claim deduction under the I-T Act.

Calculating the WDV depreciation helps, because it provides you some tax
benefit. Companies are also required to calculate written down value
depreciation, to ascertain profits and losses. In the absence of such written
down value depreciation calculations, companies may not have any indicator
of real profit and may suffer due to wrong valuations.
Rate of depreciation of common assets

Building for residential use: 5%

Building for non-residential use: 10%

Furniture and fittings: 10%

Computers including software: 40%

Plant and machinery: 15%

Motor vehicles for personal use: 15%

Motor vehicles for commercial use: 30%

All intangible assets: 25%.

WDV: Other terms used in place of written down value method

The written down value method is also known as the reducing-value method or
the reducing balance or the reducing installment method or the diminishing
balance method. Written down value method is also called book value or net book
value.

WDV method of depreciation formula

The WDV method of depreciation is considered the most logical method. An
asset is considered to provide more value in the initial years than the later
years.

Rate of Depreciation (R) = 1 – [s/c]1/n

Where, ‘s’ stands for the scrap value at the end of the period, that is ‘n’.

‘c’ stands for the WDV at present.

‘n’ is the useful life of the asset.

Note: The useful life of an asset, for different asset classes is provided in the
Schedule II of Companies Act. Useful life of buildings (other than factory
buildings) with RCC frame structure is 60 years and that of buildings (other
than factory buildings) other than RCC frame structure is 30 years.

In the WDV method, depreciation is charged on the book value of such an

asset and every year, the book value decreases. Let us see working of written
down value method through an example:

Suppose the cost of the asset is Rs 1,00,000.

Depreciation for the first year – 10%

So, depreciation is Rs 10,000 for the first year.

Depreciation for the second year = Rs 10,000 (10% of Rs 90,000) = Rs 9,000

Depreciation for the third year = 10% of Rs 81,000 [i.e., 90,000 – 9,000] = Rs
8,100
Written down value method: Merits
The WDV method helps in understanding the depreciated asset value that can
be then used to determine the price of the asset.

Higher depreciation during the beginning years directly results in reduced

taxes.
Written down value method: Demerits
Although the WDV method is the most practical and preferred method to
calculate depreciation, WDV method has its own limitations. For example,
year after year the original cost of the asset escapes attention in a written
down value method of depreciation. Secondly, the asset can never be brought
down to zero.

Moreover, any interest on the capital which is invested in the asset is also not
taken into account. The written down value method also requires extensive
book-keeping and yet, arriving at the correct value may be a difficult task.
However, if you have to calculate the WDV depreciation of a plant, machinery
or even a vehicle, the written down value method is the best.

DEEMED INCOME

Deemed income is a concept in income tax law that refers to income that is not
actually received by the taxpayer but is still considered taxable as income
under certain circumstances. This income is deemed to have been received by
the taxpayer, even if it has not been received in reality. In this article, we will
discuss in detail the concept of deemed income and the various instances in
which it arises under the Income Tax Act, 1961.

Deemed Income Under Income Tax Act, 1961

Deemed Dividend (Section 2(22)(e)):

Deemed dividend refers to a situation where a company makes a payment to its
shareholder or their relative or associate, either directly or indirectly, in the form
of a loan or advance or any other form of payment. Such payment is treated as
a dividend, and the amount of the payment is considered taxable under the head
Income from other sources in the hands of the recipient. This provision is
applicable if the payment is made by a closely held company (i.e., a company in
which the public are not substantially interested).
Deemed Profit in Lieu of Salary (Section 17(3)):

This provision applies to a situation where an employer transfers any assets or

goods to its employees or provides any services to them for a consideration that
is less than the fair market value of such assets, goods or services. In such cases,
the difference between the fair market value and the consideration paid is deemed
to be the taxable income of the employee under the head Income from Salary.

Deemed Gift (Section 56(2)(x)):

Deemed gift refers to a situation where an individual or HUF receives any property
or sum of money without any consideration, the value of which exceeds Rs.
50,000 in a financial year.In such cases, the amount or value of such property or
money is deemed to be the income of the recipient and is taxable under the head
Income from other sources. However, certain gifts are exempt from tax, such as
gifts received from relatives or on the occasion of marriage or under a will or
inheritance.

Deemed Income from Transfer of House Property (Section 56(2)(x)):

This provision applies to a situation where an individual or HUF receives any sum
of money, without any consideration or for inadequate consideration, on account
of the transfer of a house property. The difference between the fair market value
of the property and the amount received is deemed to be the taxable income of
the recipient under the head Income from other sources.
Deemed Profits and Gains from Business or Profession (Section 41(1)):
This provision applies to a situation where a taxpayer had claimed any deduction
or allowance in respect of any expenditure incurred in the past and subsequently
recovers any amount in respect of such expenditure. The amount so recovered is
deemed to be the taxable income of the taxpayer under the head Profits and gains
of business or profession.
Deemed Income from Accreted Income of a Trust or Institution (Section 115TD):
This provision applies to a situation where a trust or institution is set up for a
charitable or religious purpose, and its income or property is accumulated or set
apart for any such purpose. Any income or property that has not been applied for
charitable or religious purposes is deemed to be the income of the trust or
institution, and is taxable at the maximum marginal rate of tax.
Deemed Income Sources (Section 68): from Undisclosed
This provision applies to a situation where any sum of money is found credited in
the books of account of a taxpayer, and the taxpayer is unable to explain the
nature and source of the credit. Such sum of money is deemed to be the taxable
income of the taxpayer under the head Income from other sources.

Charge of Income-tax: [Sec. 4]

Tax cannot be levied or collected in India except under the authority of Law. Section 4 of the Income-
tax Act, 1961 gives authority to the Central Government for charging income tax. This is the charging
section in the Income-tax Act, 1961 which provides that:
(i) Tax shall be charged at the rates prescribed for the year by the Annual Finance Act;
(ii) The charge is on every person specified under section 2(31);
(iii) Tax is chargeable on the total income earned during the previous year and not the assessment
year. (There are certain exceptions provided by sections 172, 174, 174A, 175 and 176);
(iv) Tax shall be levied in accordance with and subject to the various provisions contained in the Act.
This section is the backbone of the law of income-tax insofar as it serves as the most operative provision
of the Act. The tax liability of a person springs from this section.

Overview of Section 4

Section 4 of the Income Tax Act, 1961 provides for the charge of income tax on the total
income of a taxpayer. The section lays down the scope of taxable income, which includes
all income from whatever source derived, subject to certain exemptions and deductions.
This means that all sources of income, including salary, business income, capital gains, and
other sources of income, are subject to taxation under this section.

Meaning of Total Income

According to Section 2(45) of the Income Tax Act, 1961, “Total income” means the
aggregate of income, computed under the provisions of the Act, and all other incomes
chargeable to tax under the Act, after making deductions under Chapter VI-A of the Act.
This means that the total income of an individual or a business is the sum of income from
all sources, reduced by the deductions specified in Chapter VI-A.
Residential Status

The Income Tax Act divides taxpayers into three categories based on their residential
status, i.e., resident, non-resident, and resident but not ordinarily resident. The residential
status of an individual or a business determines the taxability of income under the Income
Tax Act. A resident is liable to pay tax on his global income, whereas a non-resident is taxed
only on income that accrues or arises in India.

Tax Rates

The Income Tax Act provides for different tax rates for different categories of taxpayers
based on their income levels. The tax rates are subject to change from time to time through
amendments made in the Finance Act. The tax rates for the financial year 2022-23 are as
follows:

Individuals and HUFs

o Income up to Rs. 2.5 lakh – Nil
o Income between Rs. 2.5 lakh and Rs. 5 lakh – 5%
o Income between Rs. 5 lakh and Rs. 7.5 lakh – 10%
o Income between Rs. 7.5 lakh and Rs. 10 lakh – 15%
o Income between Rs. 10 lakh and Rs. 12.5 lakh – 20%
o Income between Rs. 12.5 lakh and Rs. 15 lakh – 25%
o Income above Rs. 15 lakh – 30%

Domestic Companies
o Income up to Rs. 1 crore – 25%
o Income above Rs. 1 crore – 30%

Foreign Companies
o Income up to Rs. 1 crore – 40%
o Income above Rs. 1 crore – 43%
Deductions under Chapter VI-A

Chapter VI-A of the Income Tax Act provides for various deductions that taxpayers can
claim while computing their taxable income. These deductions are available to individuals,
HUFs, and other taxpayers, and include deductions for contributions to certain investment
schemes, health insurance premiums, and donations made to charitable institutions. The
deductions specified in Chapter VI-A are subtracted from the gross income of the taxpayer
to arrive at the taxable income.

TDS and Advance Tax

Under the Income Tax Act, taxpayers are required to pay tax on their income in advance
through the payment of Advance Tax. The amount of Advance Tax to be paid is calculated
based on the estimated income for the financial year. Taxpayers are also required to deduct
tax at source (TDS) while making payments to certain recipients, such as employees,
contractors, and professionals. The TDS amount is then deposited with the government by
the deductor.

Penalties and Prosecution

Non-compliance with the provisions of the Income Tax Act can lead to penalties and
prosecution for taxpayers. Penalties may be imposed for late filing of tax returns, failure to
deduct TDS, and other violations of the Income Tax Act. In serious cases of non-
compliance, taxpayers may also face prosecution, which can lead to fines and
imprisonment.

Impact of Section 4 on Businesses

Section 4 of the Income Tax Act has a significant impact on businesses operating in India.
Businesses are required to pay income tax on their profits, which are calculated by
subtracting the expenses incurred during the financial year from the revenue earned. This
means that businesses must maintain accurate records of their income and expenses to
determine their taxable income accurately.
Compliance with Section 4

Compliance with Section 4 of the Income Tax Act is crucial for taxpayers to avoid legal
consequences. Taxpayers must file their tax returns on time, pay the correct amount of tax,
and comply with other provisions of the Income Tax Act. Failure to comply with the
provisions of the Income Tax Act can result in penalties and prosecution.

Recent Changes to Section 4

The Indian government has made several changes to the Income Tax Act in recent years,
including changes to Section 4. In the Union Budget 2021, the government introduced a new
tax regime for individuals and HUFs that offers lower tax rates but eliminates certain
deductions and exemptions. Taxpayers have the option to choose between the old tax
regime and the new tax regime based on their preference.

Conclusion

In conclusion, Section 4 of the Income Tax Act, 1961 is a crucial provision that lays down
the foundation for the taxation of income in India. The section defines the scope of taxable
income, provides for different tax rates, and specifies the deductions available to taxpayers.
Taxpayers should be aware of the provisions of this section and should comply with the
requirements of the Income Tax Act to avoid any legal consequences

SECTION 5 SCOPE OF TOTAL INCOME

Section 5 of the Income Tax Act, 1961, deals with the scope of total income. Total income
is the aggregate of income from all sources, whether received in India or abroad, during the
previous year.

The following are some of the sources of income that are included in the scope of total
income under Section 5 of the Income Tax Act:

• Salaries

• Profits and gains from business or profession

• Income from house property

• Capital gains

• Interest income

• Dividend income

• Income from other sources, such as lottery winnings, royalties, and agricultural income

Examples

Here are a few examples of how Section 5 of the ITA applies:

• A person who earns a salary in India will have to include that salary in their total
income, even if they are not resident in India.

• A person who earns business or professional income in India will have to include
that income in their total income, even if they are not resident in India.

• A person who sells a capital asset in India and makes a profit will have to include
that profit in their total income, even if they are not resident in India.

• A person who receives interest income from a bank in India will have to include
that income in their total income, even if they are not resident in India.
Importance Of Section 5

Section 5 of the Income Tax Act is important because it defines the scope of total income. Total income is
the basis on which your income tax liability is calculated. Therefore, it is important to understand the
different sources of income that are included in the scope of total income under Section 5 of the Income
Tax Act.

Exceptions To Section 5

Certain types of income are exempt from tax under Section 5. These include:

• Agricultural income
• Income from scholarships

• Income from life insurance policies¹

• Income from provident funds

• Income from certain types of government bonds

• Income from certain types of charitable trusts

Certain types of income are exempt from total income under Section 5 of the Income Tax Act. These
include agricultural income, income from mutual funds, and income from certain government bonds.

Calculation Of Total Income

To calculate total income, you must first identify all the sources of income that you received during the
previous year. Once you have identified all of your sources of income, you must then calculate the
income from each source.

The income from each source is calculated in accordance with the specific rules that apply to that source
of income. For example, the income from salaries is calculated by deducting the amount of provident
fund contributions and other allowable deductions from the gross salary.

Once you have calculated the income from each source, you must then add up all of the amounts to
arrive at your total income.

Here are some additional tips on how to calculate total income under Section 5:-

• Keep track of all of your income from all sources.

• Identify any allowable deductions that you may be entitled to.

• Use a tax calculator to help you calculate your total income and tax liability.
• If you are unsure about anything, consult with a qualified tax advisor.
S. No. Particulars Resident and Ordinarily Resident (ROR) Resident but not-Ordinarily
Resident
(RNOR) Non-Resident
(NR)
1 Income received or is deemed to be received in India Taxable Taxable
Taxable

2 Income accrues or arises or is deemed to accrue or arise in India Taxable

Taxable Taxable
3 Income accrues or arises outside India but business & profession controlled or set up in
India Taxable Taxable Not Taxable
4 Income accrues or arises outside India and business & profession controlled or set up
outside India Taxable Not Taxable Not Taxable
5 The past foreign (un-taxed) income brought into India Not Taxable Not Taxable
Not Taxable

Income Deemed To Be Received In India

- under Income Tax Act. 1956. (Section
7)
(1) Received in India :
Any income which is received in India, during the previous year by any assessee, is
liable to tax in India, irrespective of the residential status of the assessee and the
place of accrual of such income .

Receipts means the first receipt: The receipt of income refers to the first occasion
when the recipient gets the money under his own control. Once an amount is
received as income, any remittance or transmission of the amount to another place
does not result in receipt within the meaning of this clause at the other place .

This principle is of importance, firstly, in determining the year of receipt, and

secondly, for ascertaining the incidence of taxation where it depends purely upon
receipt of income. For instance, in the case of non-residents, their foreign income
is not assessable, unless it is actually received in India. In their case, unless, at the
time the money is received in India, it is received as income from an outside source,
such receipt will not be an income receipt. If a non-resident had already received
moneys outside India (in an earlier year or during the previous year) as income or
exempt income and he was transferring the funds into India in the accounting year,
such moneys will not count as income in the eyes of law .
Income Deemed to be Received in India [Section
7]:
The following incomes shall be deemed to be received in India in the previous year
even in the absence of actual receipt:
 1. Contribution made by the employer to the recognized provident fund in
excess of 12% of the salary of the employee;
2. Interest credited to the RPF of the employee which is in excess of 9.5% p.a.
3. Transfer balance from the unrecognized fund to a Recognised Provident
Fund (It has been discussed in the Chapter on 'Income from Salaries');
4. The contribution made, by the Central Government or any other employer
in the previous year, to the account of an employee under a notified
contributory pension scheme referred to in section 80CCD.

Income deemed to be received in India shall include the following income : –

• Contribution in excess of 12% of salary to recognized PF by the

employer or interest credited in excess of 9.5% p.a. in a recognized
Provident Fund.
• Contribution by Central Government or other employer under
pension scheme of Section 80CCD
• Employer contribution and interest amount which is transferred from
unrecognized Provident Fund to recognized Provident Fund

Understanding Section 8 of the Income Tax

Act: An Overview
Section 8 of the Income Tax Act, 1961 lays down the rules for determining the residential
status of an individual for the purpose of taxation. This is an important provision as it
decides the extent of tax liability of an individual in India. The residential status of an
individual is determined on the basis of the number of days an individual has spent in India
in a financial year and the preceding years. In this blog, we will take a closer look at section
8 of the Income Tax Act, its provisions, and the implications of being classified as a resident
or non-resident individual.

Provisions of Section 8 of the Income Tax Act:

Section 8 of the Income Tax Act specifies that an individual can be classified into any of
the following categories based on the duration of their stay in India:

1. Resident and ordinarily resident (ROR): An individual is considered as ROR if they

satisfy any one of the following conditions:
 • They have been in India for 182 days or more in the financial year.
• They have been in India for 60 days or more in the financial year and have been in
India for 365 days or more in the four preceding financial years.

2. Resident but not ordinarily resident (RNOR): An individual is considered as RNOR

if they satisfy both of the following conditions:

• They have been a non-resident individual in India in nine out of the ten preceding
financial years.
• They have been in India for 729 days or less in the seven preceding financial
years.

3. Non-resident (NR): An individual is considered as NR if they do not satisfy any of

the above-mentioned conditions.

Implications of being classified as a resident or non-resident

individual:

The classification of an individual as a resident or non-resident has significant implications

on their tax liability in India. Residents are subject to tax on their global income, which
includes income earned in India as well as income earned outside India. Non-residents, on
the other hand, are subject to tax only on income earned in India.

Another important implication of being classified as a resident or non-resident is the

availability of various tax benefits and exemptions. For instance, residents are eligible to
claim tax benefits on various investments such as provident funds, life insurance, and
equity-linked savings schemes. Non-residents, however, are not eligible to claim these
benefits.

In conclusion

section 8 of the Income Tax Act is an important provision that determines the residential
status of an individual for the purpose of taxation. The classification of an individual as a
resident or non-resident has significant implications on their tax liability and eligibility for
tax benefits and exemptions. It is therefore essential for individuals to understand the
provisions of section 8 and carefully assess their residential status before filing their tax
returns.

Section 9 of Income Tax Act 1961

Section 9 of the Income Tax Act 1961 outlines the tax implications for income earned by
non-residents or foreign entities in India. As per the provisions of this section, all income
received or accrued in India, whether directly or indirectly, is taxable under the Income Tax
Act. The section is important for foreign entities that have business operations or
investments in India.

Scope of Section 9
The scope of Section 9 is extensive and applies to various types of income earned by non-
residents or foreign entities in India. This includes:

1. Income from any business or profession that is carried on in India

2. Income from any property that is situated in India
3. Income from any asset or source of income that is situated in India
4. Income from any salary earned in India
5. Income from any dividend paid by an Indian company
6. Income from any interest earned on securities issued by the Indian government or
Indian company
7. Royalties or fees for technical services rendered in India
8. Capital gains arising from the transfer of any asset situated in India

Provisions of Section 9
Section 9 has three main provisions that determine the tax implications of income earned
by non-residents or foreign entities in India.
 1. Territorial Nexus Rule: According to this provision, any income that arises or is
deemed to arise in India is taxable in India. This applies to all types of income,
including business income, capital gains, interest income, etc.
2. Residence Rule: The provision of this rule states that any income that accrues or
arises outside India is not taxable in India if the recipient of such income is not a
resident of India. In other words, if a non-resident earns income outside India, that
income is not taxable in India.
3. Specific Inclusions Rule: This provision applies to certain types of income, such
as interest, royalties, or fees for technical services that are received from India or
for services rendered in India. Under this rule, the income is deemed to arise in
India, and hence it is taxable in India.

Implications of Section 9
Section 9 has several implications for non-residents or foreign entities doing business in
India. The following are some of the key implications:

1. Taxation of Income: Any income earned by a non-resident or foreign entity from a

business or asset situated in India is taxable in India. The tax rate for such
income is determined based on the income tax slab rates applicable for the
financial year.
2. Withholding Tax: Under Section 195 of the Income Tax Act, any person
responsible for making payment to a non-resident is required to deduct tax at
source. The tax rate is determined based on the type of income and the
provisions of the Double Taxation Avoidance Agreement (DTAA), if applicable.
3. Permanent Establishment: If a non-resident or foreign entity has a permanent
establishment (PE) in India, then the income earned from that establishment is
taxable in India. A PE is a fixed place of business, such as an office or factory,
where the non-resident carries on business in India.
Conclusion

Section 9 of the Income Tax Act 1961 is a crucial provision that determines the tax
implications of income earned by non-residents or foreign entities in India. The scope of the
section is extensive and covers various types of income. Non-residents or foreign entities
must be aware of the provisions of Section 9 and the tax implications to ensure compliance
with the law

Prepared by Sanabel Uzma