Residential status:
The incidence of tax on any assessee depends upon his residential status.
For all purpose of income tax, tax payers are classified into three broad categories on the basis of their residential status.
- Resident and ordinarily resident(ROR)
- Resident but not ordinarily resident(RNOR)
- Non resident(NR)
The residential status of an assessee must be ascertained with reference to each previous year.
Scope of total income:
The scope of total income of an assessee depends upon the following three important considerations.
- The residential status of the assessee
- The place of accrual or receipt of income, whether actual or deemed, and
- The point of time at which the income had accrued to or was received by or on behalf of the assessee.
Resident and Ordinarily resident:
Income received/deemed to be received/accrued or arisen/deemed to accrue or arise in or outside india.
Resident but not ordinarily resident:
Income which is received/deemed to be received/accrued or arisen/deemed to accrue or arise in india
And
Income which accrues or arises outside india being derived from a business controlled from or profession set up in india.
Non- Resident:
Income received or deemed to be received/ accrued or arisen/deemed to accrue or arise in india.
