1. EXAMPLES OF INCIDENCE OF TAX
WITH 6 DIFFERENT TYPES OF
INCOME
PRESENTED BY:-VAIBHAV
SINHA
CLASS:-BBA(M2)
2. INTRODUCTION What is Incidence of Tax?
A tax incidence is an economic term for the division of
a tax burden between buyers and sellers. Tax
incidence is related to the price elasticity of supply
and demand. When supply is more elastic than
demand, the tax burden falls on the buyers. If
demand is more elastic than supply, producers will
bear the cost of the tax.
For example:- the demand for cigarettes is
fairly inelastic, which means that despite changes in
price, the demand for cigarettes will remain relatively
constant. Let's imagine the govt. decided to impose an
increased tax on cigarettes. In this case, the producers
may increase the sale price by the full amount of the
tax. If consumers still purchased cigarettes in the
same amount after the increase in price, it would be
said that the tax incidence fell entirely on the buyers.
3. TYPES OF
INCOME
OR
(ORDINARY RESIDENT)
NOR
(NOT ORDINARILY
RESIDENT)
NR
(NON-RESIDENT)
INDIAN
INCOME
1) Income received in
India whether
accrued(arise) in
India or outside.
YES YES YES
2) Income deemed
(assumed) to be
received in India
whether accrue in
India or outside.
YES YES YES
3) Income accrue in
India whether
received in India or
outside.
YES YES YES
4) Income deemed to
accrued in India
whether received in
India or outside.
YES YES YES
5. EXAMPLE:-
Q1.Mr.X earns the following income during the financial
year 2014-15:
RS
a) Interest from an Indian company received in London. 1,20,000/-
b) Pension from former employer in India received in USA. 1,80,000/-
c) Profits earned from a business in Paris which is controlled
in India, half of the profits being received in India. 2,00,000/-
d) Income from agriculture in Bhutan and remitted to India. 1,25,000/-
e) Income from property in England received there. 4,00,000/-
f) Profits for the year 2013-14 of a business in USA remitted
to India during the P.Y 2014-15 (Not taxed earlier) 75,000/-
g) Gifts received from his parents. 45,000/-
6. SOLUTION:- OR NOR NR
INDIAN INCOME RS RS RS
i) Income deemed to accrue/arise in India
Interest from Indian Company 1,20,000 1,20,000 1,20,000
Pension from ex-employer in India 1,80,000 1,80,000 1,80,000
ii) Income received in India
50% of profits of business in Paris 1,00,000 1,00,000 1,00,000
FOREIGN INCOME
iii) Income earned and received outside
India, from a business controlled from
India
50% of profits of business in Paris 1,00,000 1,00,000 -
iv) Income earned and received outside
India controlled from outside.
Income from Agriculture in Bhutan. 1,25,000 - -
Income from Property in England. 4 ,00,000 - -
10,25,000 5,00,000 4,00,000
1.Profits of 2013-14 are not Y of the P.Y 2014-15 and hence cannot be included in the Y for A.Y
2015-16.
2. Gifts received from parents are not regarded as income.
