SlideShare a Scribd company logo
Corporate Tax Planning - Unit I
RESIDENTIAL STATUS (AY: 2016-17)
Dr. THULASI KRISHNA. K, Ph.D.
Dept. of Management Studies
MITS – Madanapalle, A.P., India
Residential Status Dr.TK
• Determination of residential status of a person is very important for the purpose of levy of
income tax, as income tax is levied based on the residential status of tax payer.
• What is essential is the status during the previous year and not in the assessment year.
Moreover, the concept of residential status is nothing to do with the nationality or domicile
of a person.
• The residential status of the assessee may change from year to year.
• An Indian, who is a citizen of India, can be non-resident for Income Tax purposes,
whereas a foreigner can be resident of India for Income Tax purpose.
Tax Liability = Total Income * Rate of Tax
Residential Status ≠ Citizenship
Residential Status
Resident Non - Resident
Ordinarily
Resident
Not Ordinarily
Resident
Section 6(1)
Section 6(6)
Taxable Entity
A taxable entity can be:
• An Individual
• A Hindu Undivided Family
• A firm
• An Association of Persons
• Joint stock company
• any other person
• The following table explains how these are subcategorized with respect to their
residential status.
INDIVIDUAL/HUF
RESIDENT
ORDINARY
NOT-ORDINARY
NON-
RESIDENT Others Included in the Definition of
“Person”
RESIDENT NON-RESIDENT
Determining the Residential Status of An Individual
• Section 6(1): This section applies to individuals. If an individual is to qualify as
resident of India, he has to fulfill at least one of the following two basic
conditions:
Condition Explanation
1 He is in India in the previous year for a period of 182 days or more
2
He is in India for a period of 60 days or more during the previous year and
365 days or more during 4 years immediately preceding the previous year
Exceptions:
In the following two cases, an individual needs to be present in India for a period of 182 days
or more in order to become resident in India:
1. An Indian citizen who leaves India during the previous year for the purpose of taking
employment outside India
2. An Indian citizen leaving India during the previous year as a member of the crew of an
Indian ship.
3. An Indian citizen or a person of Indian origin who comes on visit to India during the
previous year (a person is said to be of Indian origin if either he or any of his parents
or any of his grand parents was born in undivided India).
Determining if A Resident is an Ordinary Resident
Section 6(6): This section applies to individuals. If an individual is to qualify as an
ordinary resident of India, he has to fulfill both of the following two conditions in
addition to fulfilling the criteria as provided in section 6(1):
Condition Explanation
1
He has been resident in India in at least 2 out of 10 previous years
immediately preceding the relevant previous year.
2
He has been in India for a period of 730 days or more during 7 years
immediately preceding the relevant previous year.
• Individuals who satisfy any one of the basic conditions and do not satisfy the
two additional conditions, are classified as Resident but not ordinary resident.
• Individuals not satisfying anyone of the basic conditions will be classified as
Non-Resident.
Determining the Residential Status of HUF/Firm/AOP/AJP
• Section 6(2): This section applies to Hindu Undivided Family. The distinction under this
section is made as:
“A Hindu undivided family is said to be resident in India if control and management of
its affairs is wholly or partly situated in India. A Hindu undivided family is non-
resident in India if control and management of its affairs is wholly situated outside
India.”
• Control and management is situated at a place where the head, the seat and the
directing power are situated.
• Section 6(6)(b): A resident Hindu undivided family is an ordinarily resident in
India if the karta or manager of the family business satisfies the following two
additional conditions:
Condition Explanation
1
He has been resident in India in at least 2 out of 10 previous years
immediately preceding the relevant previous year.
2
He has been in India for a period of 730 days or more during 7 years
immediately preceding the relevant previous year.
Residential Status of Company
• As per section 6(3), an Indian company is always resident in India.
• A foreign company is resident in India only if, during the previous year, control
and management of its affairs is situated wholly in India.
• However, a foreign company is treated as non-resident if, during the previous
year, control and management of its affairs is either wholly or partly situated out
of India.
To put it simple,
• Resident: If Control and Management of its business affairs is wholly in India.
• Non-Resident: If Control and Management of its business affairs is wholly or
partly outside India.
• The residential status of a company and the place of its control and management
should not be decided by the location of the registered office of the company.
• As a rule, the direction, management and control, the head, seat, and directing power
of a company’s affairs are situated at the place where the directors’ meetings are held.
• Consequently, a company would be resident in the country if the meetings of directors
who manage and control the business are held there.
Case: Narottam & Periera Ltd., Vs CIT (1953)
• It is not what directors have power to do, but what they actually do, that is of
importance in determining the question of the place where the control is
exercised.
Definition of Company
Company [Sec. 2(17)]: The expression ‘company’ is defined to mean the following:
• Any Indian company; or
• Any body corporate incorporated under the laws of a foreign country; or
• Any institution, association or a body which is assessed or was assessable/assessed as a
company for any assessment year commencing on or before April 1, 1970; or
• Any institution, association or a body, whether incorporated or not and whether Indian or
non-Indian, which is declared by general or special order of the Central Board of Direct Taxes
to be a company.
Indian Company [Sec. 2(26)]:
An Indian company means a company formed and registered under the Companies Act, 1956. Besides, it includes the following:
• A company formed and registered under any law relating to companies formerly in force in any part of India other than the State of
Jammu and Kashmir and the Union territories;
• A corporation established by or under a Central, State of Provincial Act;
• Any institution, association or body which is declared by the Board to be a company under section 2(17);
• A company formed and registered under any law in force in the State of Jammu and Kashmir;
• A company formed and registered under any law for the time being in force in the Union territories of Dadra and Nagar Haveli, (State of)
Goa, Daman and Diu and Pondicherry.
In the aforesaid cases, a company, corporation, institution, association or body will be treated as an Indian company only if its registered
office is in India.
Domestic Company:
• As per Section 2(22A)​, "domestic company" means an Indian company, or any
other company which, in respect of its income liable to tax under this Act, has
made the prescribed arrangements for the declaration and payment of dividends
within India in accordance with section 194.
Foreign Company:
• As per Section 2(23A) of the Income Tax Act, 1961, Foreign Company is a
company which is not a domestic company. Thus, all those companies which do
not qualify the conditions to be considered domestic company shall be
considered foreign companies.
Industrial Company:
• It means a company which is mainly engaged in the business of generation or
distribution of electricity or any other form of power or in the construction of
ships or in the manufacture or processing of goods or in mining.
The following activities are held as ‘manufacture’ or ‘processing’ of goods on the basis of judicial
pronouncements:
• Book publishing
• Mixing different types of tea to arrive at a desired blend
• Manufacture and selling of carpets but having major source of income from sale of import entitlement
(generated by export of carpets)
• Production of cinematographic films
• Tailoring clothes
• Conversion of computer cash vouchers, invoices, etc., into balance sheet, stock account, etc.
• Sorting out, washing, drying and blending wool.
• Undergoing a change in a commodity as a result of some operation (many be manual or mechanical)
and as a result a new and distinct commodity emerges.
A Company in which Public are Substantially Interested: [Sec. 2(18)]
• Owned by Government/RBI – A company owned by the Government or the RBI or in
which not less than 40% shares (in terms of value) are held by the Government or the
Reserve Bank or a corporation owned by the Reserve Bank. Ex. BEML, BHEL, BPCL etc.
• Section 25 companies – A company registered under section 25 of the Companies Act,
1956, namely companies for promotion of commerce, art, science, religion, charity and
prohibiting the payment of any dividends to its members. Ex: International Bible Society
India, Association of Lady Entrepreneurs of Andhra Pradesh, Ravindranath Medical
Foundation, etc.
• A company without share capital - A company having no share capital and declared by the
Central Board of Direct Taxes to be a company in which the public are substantially interested.
• Nidhi or Mutual Benefit Society- A company which carries on, as its principal business, the
business of acceptance of deposits from its members and which is declared by the Central
Government under section 620A of the Companies Act to be a Nidhi or Mutual Benefit Society.
• Company owned by a Co-operative Society - If it is company in which shares carrying at least 50%
of the voting power have been allotted unconditionally to or acquired unconditionally by, and are
throughout the relevant previous year beneficially held by, one or more cooperative societies; or
• Listed Companies - If it is company which is not a private company as defined in Section 3 of the
Companies Act, 1956 and equity shares of the company were, as on the last day of the relevant
previous year, listed in a recognised stock exchange in India;
Investment Company:
• It means a company whose gross total income consists mainly of income which is
chargeable under the heads ‘Income from House Property’, ‘Capital Gains’ and
‘Income from other sources’.
Ex.: Larsen & Toubro Mutual Fund, Tata Investment Corporation
Widely-held Company
• A company in which the public are substantially interested is known
as widely-held company.
Closely-held Company :
• A company in which the public are not substantially interested is
known as a closely-held company.
Ex.: Family owned companies
Incidence Of Tax for Corporate Assessees
Particulars Resident in India Non-resident in India
Indian income Taxable in India Taxable in India
Foreign income Taxable in India Not Taxable in India
• Indian income is always taxable in India irrespective of the residential
status of the taxpayer.
• Foreign income is taxable in the hands of resident in India. Foreign income
is not taxable in the hands of non-resident in India.
Indian Income
Any of the following three is an Indian income –
• If income is received or deemed to be received in India during the previous year and at
the same time it accrues or is deemed to accrue in India during the previous years.
• If income is received or deemed to be received in India during the previous year but it
accrues outside India during the previous year.
• If income is received outside India during the previous year but it accrues or is deemed
to accrue in India during the previous year.
Foreign Income
If the following two conditions are satisfied, then such income is ‘foreign
income’-
• Income is not received or not deemed to be received in India; and
• Income does not accrue or does not deemed to accrue in India.
•Thank You

More Related Content

What's hot

Useful definations
Useful definationsUseful definations
Useful definations
Shankar Bose Sbose1958
 
All about Nidhi company
All about Nidhi companyAll about Nidhi company
All about Nidhi company
iGatrad2019
 
Scope of Total Income
Scope of Total IncomeScope of Total Income
Scope of Total Income
premarhea
 
Tax incidence
Tax incidenceTax incidence
Tax incidence
Prajwal Vernekar
 
real estate invester guide
real estate invester guidereal estate invester guide
real estate invester guide
reddvise
 
NRI taxation Recent_Amendments_Analysis_And_Implications
NRI taxation Recent_Amendments_Analysis_And_ImplicationsNRI taxation Recent_Amendments_Analysis_And_Implications
NRI taxation Recent_Amendments_Analysis_And_Implications
CA NITIN PATHAK & CO.
 
A report on legal environment of business in Bangladesh
A report on legal environment of business in  BangladeshA report on legal environment of business in  Bangladesh
A report on legal environment of business in Bangladesh
Mehadi
 
Taxability on Non-Resident Indian
Taxability on Non-Resident IndianTaxability on Non-Resident Indian
Taxability on Non-Resident Indian
ASC Group
 
Residential status
Residential statusResidential status
Residential status
premarhea
 
Requirements of registration for trade unions
Requirements of registration for trade unionsRequirements of registration for trade unions
Requirements of registration for trade unions
FAST NUCES
 
Companies amendment act 2019
Companies amendment act 2019Companies amendment act 2019
Companies amendment act 2019
Uttam Mohallik
 
Income tax
Income tax Income tax
Income tax
Vikash Barnwal
 
FDI & FEMA - Reinforcing Indian Economy
FDI & FEMA - Reinforcing Indian EconomyFDI & FEMA - Reinforcing Indian Economy
FDI & FEMA - Reinforcing Indian Economy
Resurgent India
 
Registration of trade union in india
Registration of trade union in indiaRegistration of trade union in india
Registration of trade union in india
Akanksha Bartakke
 
Trade union act 1926
Trade union act 1926Trade union act 1926
Trade union act 1926
Rahul Tiwari
 
NBFC Registration in India
NBFC Registration in IndiaNBFC Registration in India
NBFC Registration in India
EquiCorp Associates
 
registration of trade union of india
registration of trade union of indiaregistration of trade union of india
registration of trade union of india
Roseate Chettri
 
The Trade Unions Act Regt&Cancln
The Trade Unions Act Regt&CanclnThe Trade Unions Act Regt&Cancln
The Trade Unions Act Regt&Cancln
sajjal s
 
Real estate investor's guide
Real estate investor's guideReal estate investor's guide
Real estate investor's guide
umrella
 
Trade Union Act, 1926
Trade Union Act, 1926Trade Union Act, 1926
Trade Union Act, 1926
Tarseam Singh
 

What's hot (20)

Useful definations
Useful definationsUseful definations
Useful definations
 
All about Nidhi company
All about Nidhi companyAll about Nidhi company
All about Nidhi company
 
Scope of Total Income
Scope of Total IncomeScope of Total Income
Scope of Total Income
 
Tax incidence
Tax incidenceTax incidence
Tax incidence
 
real estate invester guide
real estate invester guidereal estate invester guide
real estate invester guide
 
NRI taxation Recent_Amendments_Analysis_And_Implications
NRI taxation Recent_Amendments_Analysis_And_ImplicationsNRI taxation Recent_Amendments_Analysis_And_Implications
NRI taxation Recent_Amendments_Analysis_And_Implications
 
A report on legal environment of business in Bangladesh
A report on legal environment of business in  BangladeshA report on legal environment of business in  Bangladesh
A report on legal environment of business in Bangladesh
 
Taxability on Non-Resident Indian
Taxability on Non-Resident IndianTaxability on Non-Resident Indian
Taxability on Non-Resident Indian
 
Residential status
Residential statusResidential status
Residential status
 
Requirements of registration for trade unions
Requirements of registration for trade unionsRequirements of registration for trade unions
Requirements of registration for trade unions
 
Companies amendment act 2019
Companies amendment act 2019Companies amendment act 2019
Companies amendment act 2019
 
Income tax
Income tax Income tax
Income tax
 
FDI & FEMA - Reinforcing Indian Economy
FDI & FEMA - Reinforcing Indian EconomyFDI & FEMA - Reinforcing Indian Economy
FDI & FEMA - Reinforcing Indian Economy
 
Registration of trade union in india
Registration of trade union in indiaRegistration of trade union in india
Registration of trade union in india
 
Trade union act 1926
Trade union act 1926Trade union act 1926
Trade union act 1926
 
NBFC Registration in India
NBFC Registration in IndiaNBFC Registration in India
NBFC Registration in India
 
registration of trade union of india
registration of trade union of indiaregistration of trade union of india
registration of trade union of india
 
The Trade Unions Act Regt&Cancln
The Trade Unions Act Regt&CanclnThe Trade Unions Act Regt&Cancln
The Trade Unions Act Regt&Cancln
 
Real estate investor's guide
Real estate investor's guideReal estate investor's guide
Real estate investor's guide
 
Trade Union Act, 1926
Trade Union Act, 1926Trade Union Act, 1926
Trade Union Act, 1926
 

Viewers also liked

Unit 2 tk-technology in business research - thulasi krishna
Unit 2 tk-technology in business research - thulasi krishnaUnit 2 tk-technology in business research - thulasi krishna
Unit 2 tk-technology in business research - thulasi krishna
Madanapalle Institute of Technology & Science
 
Unit 2-ethichs-tk
Unit 2-ethichs-tkUnit 2-ethichs-tk
Types of Research -Business Research Methods
Types of Research -Business Research MethodsTypes of Research -Business Research Methods
Types of Research -Business Research Methods
Madanapalle Institute of Technology & Science
 
Business Research Methods - Hypothesis
 Business Research Methods  - Hypothesis Business Research Methods  - Hypothesis
Business Research Methods - Hypothesis
Madanapalle Institute of Technology & Science
 
BRM -Dr. TK - Research report
BRM -Dr. TK - Research reportBRM -Dr. TK - Research report
BRM -Dr. TK - Research report
Madanapalle Institute of Technology & Science
 
Unit 2 tk-softwares in br
Unit 2 tk-softwares in brUnit 2 tk-softwares in br
Unit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
Unit 1-introduction-Business Research Methods -Dr. Thulasi KrishnaUnit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
Unit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
Madanapalle Institute of Technology & Science
 
Unit 2-fm-capital budgeting tk-ppt
Unit 2-fm-capital budgeting tk-pptUnit 2-fm-capital budgeting tk-ppt
Unit 2-fm-capital budgeting tk-ppt
Madanapalle Institute of Technology & Science
 
Unit 2-ethichs-tk
Unit 2-ethichs-tkUnit 2-ethichs-tk
BRM - Dr. TK - Characteristics of a Good Questionnaire
BRM - Dr. TK - Characteristics of a Good QuestionnaireBRM - Dr. TK - Characteristics of a Good Questionnaire
BRM - Dr. TK - Characteristics of a Good Questionnaire
Madanapalle Institute of Technology & Science
 
Unit 5 hirepurchase and Lease
Unit 5 hirepurchase and LeaseUnit 5 hirepurchase and Lease
Unit 5 hirepurchase and Lease
Madanapalle Institute of Technology & Science
 
Unit 1-fm-intrduction-1 ppt
Unit 1-fm-intrduction-1 pptUnit 1-fm-intrduction-1 ppt
Unit 1-accounting introduction-ppt
Unit 1-accounting introduction-pptUnit 1-accounting introduction-ppt
Unit 1-accounting introduction-ppt
Madanapalle Institute of Technology & Science
 
Residential status ss
Residential status ssResidential status ss
Residential status ss
Siddharth Ranjan
 
Unit 1-tk-ppt
Unit 1-tk-pptUnit 1-tk-ppt
Residential status
Residential statusResidential status
Residential status
ginopgeorge
 
Lesson 2 residential status
Lesson 2 residential statusLesson 2 residential status
Lesson 2 residential status
Kinnar Majithia
 
Residential status sec 6 (1)
Residential status sec 6 (1)Residential status sec 6 (1)
Residential status sec 6 (1)
Adil Shaikh
 
Residential status
Residential statusResidential status
Residential status
Puneet Arora
 
Types of exploratory research design
Types of exploratory research designTypes of exploratory research design
Types of exploratory research design
Zara Imran
 

Viewers also liked (20)

Unit 2 tk-technology in business research - thulasi krishna
Unit 2 tk-technology in business research - thulasi krishnaUnit 2 tk-technology in business research - thulasi krishna
Unit 2 tk-technology in business research - thulasi krishna
 
Unit 2-ethichs-tk
Unit 2-ethichs-tkUnit 2-ethichs-tk
Unit 2-ethichs-tk
 
Types of Research -Business Research Methods
Types of Research -Business Research MethodsTypes of Research -Business Research Methods
Types of Research -Business Research Methods
 
Business Research Methods - Hypothesis
 Business Research Methods  - Hypothesis Business Research Methods  - Hypothesis
Business Research Methods - Hypothesis
 
BRM -Dr. TK - Research report
BRM -Dr. TK - Research reportBRM -Dr. TK - Research report
BRM -Dr. TK - Research report
 
Unit 2 tk-softwares in br
Unit 2 tk-softwares in brUnit 2 tk-softwares in br
Unit 2 tk-softwares in br
 
Unit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
Unit 1-introduction-Business Research Methods -Dr. Thulasi KrishnaUnit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
Unit 1-introduction-Business Research Methods -Dr. Thulasi Krishna
 
Unit 2-fm-capital budgeting tk-ppt
Unit 2-fm-capital budgeting tk-pptUnit 2-fm-capital budgeting tk-ppt
Unit 2-fm-capital budgeting tk-ppt
 
Unit 2-ethichs-tk
Unit 2-ethichs-tkUnit 2-ethichs-tk
Unit 2-ethichs-tk
 
BRM - Dr. TK - Characteristics of a Good Questionnaire
BRM - Dr. TK - Characteristics of a Good QuestionnaireBRM - Dr. TK - Characteristics of a Good Questionnaire
BRM - Dr. TK - Characteristics of a Good Questionnaire
 
Unit 5 hirepurchase and Lease
Unit 5 hirepurchase and LeaseUnit 5 hirepurchase and Lease
Unit 5 hirepurchase and Lease
 
Unit 1-fm-intrduction-1 ppt
Unit 1-fm-intrduction-1 pptUnit 1-fm-intrduction-1 ppt
Unit 1-fm-intrduction-1 ppt
 
Unit 1-accounting introduction-ppt
Unit 1-accounting introduction-pptUnit 1-accounting introduction-ppt
Unit 1-accounting introduction-ppt
 
Residential status ss
Residential status ssResidential status ss
Residential status ss
 
Unit 1-tk-ppt
Unit 1-tk-pptUnit 1-tk-ppt
Unit 1-tk-ppt
 
Residential status
Residential statusResidential status
Residential status
 
Lesson 2 residential status
Lesson 2 residential statusLesson 2 residential status
Lesson 2 residential status
 
Residential status sec 6 (1)
Residential status sec 6 (1)Residential status sec 6 (1)
Residential status sec 6 (1)
 
Residential status
Residential statusResidential status
Residential status
 
Types of exploratory research design
Types of exploratory research designTypes of exploratory research design
Types of exploratory research design
 

Similar to Unit 1-tk-part-2

Concept of residence under income tax act (with the concept of dtaa and poem)
Concept of residence under income tax act (with the concept of dtaa and poem)Concept of residence under income tax act (with the concept of dtaa and poem)
Concept of residence under income tax act (with the concept of dtaa and poem)
Amitabh Srivastava
 
corporate tax planning .pptx
corporate tax planning .pptxcorporate tax planning .pptx
corporate tax planning .pptx
DivyanshiAgarwal25
 
FEMA ACT 1999 (2).pptx
FEMA ACT 1999 (2).pptxFEMA ACT 1999 (2).pptx
FEMA ACT 1999 (2).pptx
LakshayAggarwal62
 
Lecture 2 resident status
Lecture 2   resident statusLecture 2   resident status
Lecture 2 resident status
sumit235
 
Business Taxation Notes
Business Taxation NotesBusiness Taxation Notes
Business Taxation Notes
jitendrasangle
 
residential status and its effect on tax incidence
residential status and its effect on tax incidenceresidential status and its effect on tax incidence
residential status and its effect on tax incidence
faizchhipa
 
Complete ctp unit 1
Complete ctp unit 1Complete ctp unit 1
Lecture 2 resident status
Lecture 2   resident statusLecture 2   resident status
Lecture 2 resident status
sumit235
 
Taxability of Non Resident in India – At a Glance
Taxability of Non Resident in India – At a GlanceTaxability of Non Resident in India – At a Glance
Taxability of Non Resident in India – At a Glance
CA Shiv Kumar Sharma
 
Residential status-ppt1 (2)
Residential status-ppt1 (2)Residential status-ppt1 (2)
Residential status-ppt1 (2)
Rajesh Kumar Vishwakarma
 
Income tax act 1961
Income tax act 1961Income tax act 1961
Income tax act 1961
Sumeet Jayswaal
 
Residential status
Residential statusResidential status
Residential status
PADMINIGOVARDHAN
 
03 residential status 17 18 ay
03 residential status 17 18 ay03 residential status 17 18 ay
03 residential status 17 18 ay
Joseph Puthussery
 
DEFNTONS of taxation law with explanation
DEFNTONS of taxation law with explanationDEFNTONS of taxation law with explanation
DEFNTONS of taxation law with explanation
PoojaGadiya1
 
tax.pptx
tax.pptxtax.pptx
tax.pptx
DevarajuBn
 
RESIDENTIAL STATUS AND INCOME TAX
RESIDENTIAL STATUS AND INCOME TAX   RESIDENTIAL STATUS AND INCOME TAX
RESIDENTIAL STATUS AND INCOME TAX
MACFAST
 
UNIT-1C.pptx
UNIT-1C.pptxUNIT-1C.pptx
UNIT-1C.pptx
RAJI585568
 
Residential status of NRI & Scope
Residential status of NRI & ScopeResidential status of NRI & Scope
Residential status of NRI & Scope
TAXPERT PROFESSIONALS
 
INCOME_TAX2 TO SECURE OFFER IT secure offer no
INCOME_TAX2 TO SECURE OFFER IT secure offer noINCOME_TAX2 TO SECURE OFFER IT secure offer no
INCOME_TAX2 TO SECURE OFFER IT secure offer no
DSECMCA
 
Megha Tomar
Megha TomarMegha Tomar
Megha Tomar
Megha tomar
 

Similar to Unit 1-tk-part-2 (20)

Concept of residence under income tax act (with the concept of dtaa and poem)
Concept of residence under income tax act (with the concept of dtaa and poem)Concept of residence under income tax act (with the concept of dtaa and poem)
Concept of residence under income tax act (with the concept of dtaa and poem)
 
corporate tax planning .pptx
corporate tax planning .pptxcorporate tax planning .pptx
corporate tax planning .pptx
 
FEMA ACT 1999 (2).pptx
FEMA ACT 1999 (2).pptxFEMA ACT 1999 (2).pptx
FEMA ACT 1999 (2).pptx
 
Lecture 2 resident status
Lecture 2   resident statusLecture 2   resident status
Lecture 2 resident status
 
Business Taxation Notes
Business Taxation NotesBusiness Taxation Notes
Business Taxation Notes
 
residential status and its effect on tax incidence
residential status and its effect on tax incidenceresidential status and its effect on tax incidence
residential status and its effect on tax incidence
 
Complete ctp unit 1
Complete ctp unit 1Complete ctp unit 1
Complete ctp unit 1
 
Lecture 2 resident status
Lecture 2   resident statusLecture 2   resident status
Lecture 2 resident status
 
Taxability of Non Resident in India – At a Glance
Taxability of Non Resident in India – At a GlanceTaxability of Non Resident in India – At a Glance
Taxability of Non Resident in India – At a Glance
 
Residential status-ppt1 (2)
Residential status-ppt1 (2)Residential status-ppt1 (2)
Residential status-ppt1 (2)
 
Income tax act 1961
Income tax act 1961Income tax act 1961
Income tax act 1961
 
Residential status
Residential statusResidential status
Residential status
 
03 residential status 17 18 ay
03 residential status 17 18 ay03 residential status 17 18 ay
03 residential status 17 18 ay
 
DEFNTONS of taxation law with explanation
DEFNTONS of taxation law with explanationDEFNTONS of taxation law with explanation
DEFNTONS of taxation law with explanation
 
tax.pptx
tax.pptxtax.pptx
tax.pptx
 
RESIDENTIAL STATUS AND INCOME TAX
RESIDENTIAL STATUS AND INCOME TAX   RESIDENTIAL STATUS AND INCOME TAX
RESIDENTIAL STATUS AND INCOME TAX
 
UNIT-1C.pptx
UNIT-1C.pptxUNIT-1C.pptx
UNIT-1C.pptx
 
Residential status of NRI & Scope
Residential status of NRI & ScopeResidential status of NRI & Scope
Residential status of NRI & Scope
 
INCOME_TAX2 TO SECURE OFFER IT secure offer no
INCOME_TAX2 TO SECURE OFFER IT secure offer noINCOME_TAX2 TO SECURE OFFER IT secure offer no
INCOME_TAX2 TO SECURE OFFER IT secure offer no
 
Megha Tomar
Megha TomarMegha Tomar
Megha Tomar
 

More from Madanapalle Institute of Technology & Science

Unit 8- Sources of Business Finance-1 - Inter - Commerce
Unit 8- Sources of Business Finance-1 - Inter - CommerceUnit 8- Sources of Business Finance-1 - Inter - Commerce
Unit 8- Sources of Business Finance-1 - Inter - Commerce
Madanapalle Institute of Technology & Science
 
Unit 7-MOA - AOA - Prospectus - Inter - Commerce
Unit 7-MOA - AOA - Prospectus - Inter - CommerceUnit 7-MOA - AOA - Prospectus - Inter - Commerce
Unit 7-MOA - AOA - Prospectus - Inter - Commerce
Madanapalle Institute of Technology & Science
 
Unit 7- Company Incorporation- Inter - Commerce
Unit 7- Company Incorporation- Inter - CommerceUnit 7- Company Incorporation- Inter - Commerce
Unit 7- Company Incorporation- Inter - Commerce
Madanapalle Institute of Technology & Science
 
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy BusinessUnit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
Madanapalle Institute of Technology & Science
 
Unit 3-Forms of BO-Inter-Commerce
Unit 3-Forms of BO-Inter-CommerceUnit 3-Forms of BO-Inter-Commerce
Unit 3-Forms of BO-Inter-Commerce
Madanapalle Institute of Technology & Science
 
Unit 3-business services
Unit 3-business servicesUnit 3-business services
Unit 2-business activities
Unit 2-business activitiesUnit 2-business activities
Unit 1-concept of business
Unit 1-concept of businessUnit 1-concept of business
Dr.TK-Business Research Methods -Data Analysis
Dr.TK-Business Research Methods -Data AnalysisDr.TK-Business Research Methods -Data Analysis
Dr.TK-Business Research Methods -Data Analysis
Madanapalle Institute of Technology & Science
 
R18 unit-1-tk-part-1-technologies in research
R18 unit-1-tk-part-1-technologies in researchR18 unit-1-tk-part-1-technologies in research
R18 unit-1-tk-part-1-technologies in research
Madanapalle Institute of Technology & Science
 
Rural immersion dr.tk-ppt-2
Rural immersion   dr.tk-ppt-2Rural immersion   dr.tk-ppt-2
Rural immersion tk-ppt
Rural immersion tk-pptRural immersion tk-ppt
Dr.tk gst-ppt
Dr.tk gst-pptDr.tk gst-ppt
Unit 3 Dr.TK- research design
Unit 3  Dr.TK- research designUnit 3  Dr.TK- research design
Unit 3 Dr.TK- research design
Madanapalle Institute of Technology & Science
 
Accounting introduction ppt
Accounting introduction pptAccounting introduction ppt
Unit 1-accounting introduction-ppt
Unit 1-accounting introduction-pptUnit 1-accounting introduction-ppt
Unit 1-accounting introduction-ppt
Madanapalle Institute of Technology & Science
 

More from Madanapalle Institute of Technology & Science (16)

Unit 8- Sources of Business Finance-1 - Inter - Commerce
Unit 8- Sources of Business Finance-1 - Inter - CommerceUnit 8- Sources of Business Finance-1 - Inter - Commerce
Unit 8- Sources of Business Finance-1 - Inter - Commerce
 
Unit 7-MOA - AOA - Prospectus - Inter - Commerce
Unit 7-MOA - AOA - Prospectus - Inter - CommerceUnit 7-MOA - AOA - Prospectus - Inter - Commerce
Unit 7-MOA - AOA - Prospectus - Inter - Commerce
 
Unit 7- Company Incorporation- Inter - Commerce
Unit 7- Company Incorporation- Inter - CommerceUnit 7- Company Incorporation- Inter - Commerce
Unit 7- Company Incorporation- Inter - Commerce
 
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy BusinessUnit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
Unit 4-JHF-Inter-I Year-Commerce - Joint Hindu Famliy Business
 
Unit 3-Forms of BO-Inter-Commerce
Unit 3-Forms of BO-Inter-CommerceUnit 3-Forms of BO-Inter-Commerce
Unit 3-Forms of BO-Inter-Commerce
 
Unit 3-business services
Unit 3-business servicesUnit 3-business services
Unit 3-business services
 
Unit 2-business activities
Unit 2-business activitiesUnit 2-business activities
Unit 2-business activities
 
Unit 1-concept of business
Unit 1-concept of businessUnit 1-concept of business
Unit 1-concept of business
 
Dr.TK-Business Research Methods -Data Analysis
Dr.TK-Business Research Methods -Data AnalysisDr.TK-Business Research Methods -Data Analysis
Dr.TK-Business Research Methods -Data Analysis
 
R18 unit-1-tk-part-1-technologies in research
R18 unit-1-tk-part-1-technologies in researchR18 unit-1-tk-part-1-technologies in research
R18 unit-1-tk-part-1-technologies in research
 
Rural immersion dr.tk-ppt-2
Rural immersion   dr.tk-ppt-2Rural immersion   dr.tk-ppt-2
Rural immersion dr.tk-ppt-2
 
Rural immersion tk-ppt
Rural immersion tk-pptRural immersion tk-ppt
Rural immersion tk-ppt
 
Dr.tk gst-ppt
Dr.tk gst-pptDr.tk gst-ppt
Dr.tk gst-ppt
 
Unit 3 Dr.TK- research design
Unit 3  Dr.TK- research designUnit 3  Dr.TK- research design
Unit 3 Dr.TK- research design
 
Accounting introduction ppt
Accounting introduction pptAccounting introduction ppt
Accounting introduction ppt
 
Unit 1-accounting introduction-ppt
Unit 1-accounting introduction-pptUnit 1-accounting introduction-ppt
Unit 1-accounting introduction-ppt
 

Recently uploaded

Westminster degree offer diploma Transcript
Westminster degree offer diploma TranscriptWestminster degree offer diploma Transcript
Westminster degree offer diploma Transcript
pehqgou
 
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
AHRP Law Firm
 
The Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma TranscriptThe Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma Transcript
qgoomz
 
Birmingham degree offer diploma Transcript
Birmingham degree offer diploma TranscriptBirmingham degree offer diploma Transcript
Birmingham degree offer diploma Transcript
pehqgou
 
ArtEZ biyezheng degree offer diploma Transcript
ArtEZ biyezheng degree offer diploma TranscriptArtEZ biyezheng degree offer diploma Transcript
ArtEZ biyezheng degree offer diploma Transcript
qpeqmso
 
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
Paisley Law LLC
 
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie LondonDallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
ReggieLondon Lawyer
 
cyber law and ethics regulation of the connected world
cyber law and ethics regulation of the connected worldcyber law and ethics regulation of the connected world
cyber law and ethics regulation of the connected world
JeneferAlan1
 
Occupational Safety and Health Act (Amendment) 2022
Occupational Safety and Health Act (Amendment) 2022Occupational Safety and Health Act (Amendment) 2022
Occupational Safety and Health Act (Amendment) 2022
NguokYingNgu1
 
The Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma TranscriptThe Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma Transcript
qgoomz
 
UofT biyezheng degree offer diploma Transcript
UofT biyezheng degree offer diploma TranscriptUofT biyezheng degree offer diploma Transcript
UofT biyezheng degree offer diploma Transcript
qpeqmso
 
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
Dr. Oliver Massmann
 
Tech Startups: Expert Advice from Aaron Kelly Arizona
Tech Startups: Expert Advice from Aaron Kelly ArizonaTech Startups: Expert Advice from Aaron Kelly Arizona
Tech Startups: Expert Advice from Aaron Kelly Arizona
Aaron Kelly Lawyer
 
California Baptist University degree offer diploma Transcript
California Baptist University degree offer diploma TranscriptCalifornia Baptist University degree offer diploma Transcript
California Baptist University degree offer diploma Transcript
qgoomz
 
Hindu Marriage Act hhhjjdsruog, 1955.pdf
Hindu Marriage Act hhhjjdsruog, 1955.pdfHindu Marriage Act hhhjjdsruog, 1955.pdf
Hindu Marriage Act hhhjjdsruog, 1955.pdf
mayurpandit108
 
Trademark Search & Filing LA Secure Brand
Trademark Search & Filing LA Secure BrandTrademark Search & Filing LA Secure Brand
Trademark Search & Filing LA Secure Brand
Trademark Quick
 
UNTEC biyezheng degree offer diploma Transcript
UNTEC biyezheng degree offer diploma TranscriptUNTEC biyezheng degree offer diploma Transcript
UNTEC biyezheng degree offer diploma Transcript
qpeqmso
 
Bristol degree offer diploma Transcript
Bristol degree offer diploma TranscriptBristol degree offer diploma Transcript
Bristol degree offer diploma Transcript
geesuk
 
Southern Illinois UniversityCarbondale degree offer diploma Transcript
Southern Illinois UniversityCarbondale degree offer diploma TranscriptSouthern Illinois UniversityCarbondale degree offer diploma Transcript
Southern Illinois UniversityCarbondale degree offer diploma Transcript
qgoomz
 
Esipf Consultants: Best Epf Consultancy Service In Delhi
Esipf Consultants: Best Epf Consultancy Service In DelhiEsipf Consultants: Best Epf Consultancy Service In Delhi
Esipf Consultants: Best Epf Consultancy Service In Delhi
esipfconsultantsoffp
 

Recently uploaded (20)

Westminster degree offer diploma Transcript
Westminster degree offer diploma TranscriptWestminster degree offer diploma Transcript
Westminster degree offer diploma Transcript
 
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
Exploring Maternal and Child Welfare in accordance with Law Number 4 of 2024 ...
 
The Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma TranscriptThe Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma Transcript
 
Birmingham degree offer diploma Transcript
Birmingham degree offer diploma TranscriptBirmingham degree offer diploma Transcript
Birmingham degree offer diploma Transcript
 
ArtEZ biyezheng degree offer diploma Transcript
ArtEZ biyezheng degree offer diploma TranscriptArtEZ biyezheng degree offer diploma Transcript
ArtEZ biyezheng degree offer diploma Transcript
 
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
PERSONAL INJURY LAW: EVERYTHING YOU NEED TO KNOW IN 2024
 
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie LondonDallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
Dallas Criminal Attorney | Frisco Criminal Attorney- Reggie London
 
cyber law and ethics regulation of the connected world
cyber law and ethics regulation of the connected worldcyber law and ethics regulation of the connected world
cyber law and ethics regulation of the connected world
 
Occupational Safety and Health Act (Amendment) 2022
Occupational Safety and Health Act (Amendment) 2022Occupational Safety and Health Act (Amendment) 2022
Occupational Safety and Health Act (Amendment) 2022
 
The Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma TranscriptThe Art Institute of California degree offer diploma Transcript
The Art Institute of California degree offer diploma Transcript
 
UofT biyezheng degree offer diploma Transcript
UofT biyezheng degree offer diploma TranscriptUofT biyezheng degree offer diploma Transcript
UofT biyezheng degree offer diploma Transcript
 
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
MAKING LARGE-SCALE SOLAR PROJECTS VIABLE IN VIETNAM: INNOVATIVE APPROACHES IN...
 
Tech Startups: Expert Advice from Aaron Kelly Arizona
Tech Startups: Expert Advice from Aaron Kelly ArizonaTech Startups: Expert Advice from Aaron Kelly Arizona
Tech Startups: Expert Advice from Aaron Kelly Arizona
 
California Baptist University degree offer diploma Transcript
California Baptist University degree offer diploma TranscriptCalifornia Baptist University degree offer diploma Transcript
California Baptist University degree offer diploma Transcript
 
Hindu Marriage Act hhhjjdsruog, 1955.pdf
Hindu Marriage Act hhhjjdsruog, 1955.pdfHindu Marriage Act hhhjjdsruog, 1955.pdf
Hindu Marriage Act hhhjjdsruog, 1955.pdf
 
Trademark Search & Filing LA Secure Brand
Trademark Search & Filing LA Secure BrandTrademark Search & Filing LA Secure Brand
Trademark Search & Filing LA Secure Brand
 
UNTEC biyezheng degree offer diploma Transcript
UNTEC biyezheng degree offer diploma TranscriptUNTEC biyezheng degree offer diploma Transcript
UNTEC biyezheng degree offer diploma Transcript
 
Bristol degree offer diploma Transcript
Bristol degree offer diploma TranscriptBristol degree offer diploma Transcript
Bristol degree offer diploma Transcript
 
Southern Illinois UniversityCarbondale degree offer diploma Transcript
Southern Illinois UniversityCarbondale degree offer diploma TranscriptSouthern Illinois UniversityCarbondale degree offer diploma Transcript
Southern Illinois UniversityCarbondale degree offer diploma Transcript
 
Esipf Consultants: Best Epf Consultancy Service In Delhi
Esipf Consultants: Best Epf Consultancy Service In DelhiEsipf Consultants: Best Epf Consultancy Service In Delhi
Esipf Consultants: Best Epf Consultancy Service In Delhi
 

Unit 1-tk-part-2

  • 1. Corporate Tax Planning - Unit I RESIDENTIAL STATUS (AY: 2016-17) Dr. THULASI KRISHNA. K, Ph.D. Dept. of Management Studies MITS – Madanapalle, A.P., India
  • 2. Residential Status Dr.TK • Determination of residential status of a person is very important for the purpose of levy of income tax, as income tax is levied based on the residential status of tax payer. • What is essential is the status during the previous year and not in the assessment year. Moreover, the concept of residential status is nothing to do with the nationality or domicile of a person. • The residential status of the assessee may change from year to year. • An Indian, who is a citizen of India, can be non-resident for Income Tax purposes, whereas a foreigner can be resident of India for Income Tax purpose.
  • 3. Tax Liability = Total Income * Rate of Tax Residential Status ≠ Citizenship Residential Status Resident Non - Resident Ordinarily Resident Not Ordinarily Resident Section 6(1) Section 6(6)
  • 4. Taxable Entity A taxable entity can be: • An Individual • A Hindu Undivided Family • A firm • An Association of Persons • Joint stock company • any other person
  • 5. • The following table explains how these are subcategorized with respect to their residential status. INDIVIDUAL/HUF RESIDENT ORDINARY NOT-ORDINARY NON- RESIDENT Others Included in the Definition of “Person” RESIDENT NON-RESIDENT
  • 6. Determining the Residential Status of An Individual • Section 6(1): This section applies to individuals. If an individual is to qualify as resident of India, he has to fulfill at least one of the following two basic conditions: Condition Explanation 1 He is in India in the previous year for a period of 182 days or more 2 He is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year
  • 7. Exceptions: In the following two cases, an individual needs to be present in India for a period of 182 days or more in order to become resident in India: 1. An Indian citizen who leaves India during the previous year for the purpose of taking employment outside India 2. An Indian citizen leaving India during the previous year as a member of the crew of an Indian ship. 3. An Indian citizen or a person of Indian origin who comes on visit to India during the previous year (a person is said to be of Indian origin if either he or any of his parents or any of his grand parents was born in undivided India).
  • 8. Determining if A Resident is an Ordinary Resident Section 6(6): This section applies to individuals. If an individual is to qualify as an ordinary resident of India, he has to fulfill both of the following two conditions in addition to fulfilling the criteria as provided in section 6(1): Condition Explanation 1 He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year. 2 He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.
  • 9. • Individuals who satisfy any one of the basic conditions and do not satisfy the two additional conditions, are classified as Resident but not ordinary resident. • Individuals not satisfying anyone of the basic conditions will be classified as Non-Resident.
  • 10. Determining the Residential Status of HUF/Firm/AOP/AJP • Section 6(2): This section applies to Hindu Undivided Family. The distinction under this section is made as: “A Hindu undivided family is said to be resident in India if control and management of its affairs is wholly or partly situated in India. A Hindu undivided family is non- resident in India if control and management of its affairs is wholly situated outside India.” • Control and management is situated at a place where the head, the seat and the directing power are situated.
  • 11. • Section 6(6)(b): A resident Hindu undivided family is an ordinarily resident in India if the karta or manager of the family business satisfies the following two additional conditions: Condition Explanation 1 He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year. 2 He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.
  • 12. Residential Status of Company • As per section 6(3), an Indian company is always resident in India. • A foreign company is resident in India only if, during the previous year, control and management of its affairs is situated wholly in India. • However, a foreign company is treated as non-resident if, during the previous year, control and management of its affairs is either wholly or partly situated out of India.
  • 13. To put it simple, • Resident: If Control and Management of its business affairs is wholly in India. • Non-Resident: If Control and Management of its business affairs is wholly or partly outside India.
  • 14. • The residential status of a company and the place of its control and management should not be decided by the location of the registered office of the company. • As a rule, the direction, management and control, the head, seat, and directing power of a company’s affairs are situated at the place where the directors’ meetings are held. • Consequently, a company would be resident in the country if the meetings of directors who manage and control the business are held there.
  • 15. Case: Narottam & Periera Ltd., Vs CIT (1953) • It is not what directors have power to do, but what they actually do, that is of importance in determining the question of the place where the control is exercised.
  • 16. Definition of Company Company [Sec. 2(17)]: The expression ‘company’ is defined to mean the following: • Any Indian company; or • Any body corporate incorporated under the laws of a foreign country; or • Any institution, association or a body which is assessed or was assessable/assessed as a company for any assessment year commencing on or before April 1, 1970; or • Any institution, association or a body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order of the Central Board of Direct Taxes to be a company.
  • 17. Indian Company [Sec. 2(26)]: An Indian company means a company formed and registered under the Companies Act, 1956. Besides, it includes the following: • A company formed and registered under any law relating to companies formerly in force in any part of India other than the State of Jammu and Kashmir and the Union territories; • A corporation established by or under a Central, State of Provincial Act; • Any institution, association or body which is declared by the Board to be a company under section 2(17); • A company formed and registered under any law in force in the State of Jammu and Kashmir; • A company formed and registered under any law for the time being in force in the Union territories of Dadra and Nagar Haveli, (State of) Goa, Daman and Diu and Pondicherry. In the aforesaid cases, a company, corporation, institution, association or body will be treated as an Indian company only if its registered office is in India.
  • 18. Domestic Company: • As per Section 2(22A)​, "domestic company" means an Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment of dividends within India in accordance with section 194.
  • 19. Foreign Company: • As per Section 2(23A) of the Income Tax Act, 1961, Foreign Company is a company which is not a domestic company. Thus, all those companies which do not qualify the conditions to be considered domestic company shall be considered foreign companies.
  • 20. Industrial Company: • It means a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining.
  • 21. The following activities are held as ‘manufacture’ or ‘processing’ of goods on the basis of judicial pronouncements: • Book publishing • Mixing different types of tea to arrive at a desired blend • Manufacture and selling of carpets but having major source of income from sale of import entitlement (generated by export of carpets) • Production of cinematographic films • Tailoring clothes • Conversion of computer cash vouchers, invoices, etc., into balance sheet, stock account, etc. • Sorting out, washing, drying and blending wool. • Undergoing a change in a commodity as a result of some operation (many be manual or mechanical) and as a result a new and distinct commodity emerges.
  • 22. A Company in which Public are Substantially Interested: [Sec. 2(18)] • Owned by Government/RBI – A company owned by the Government or the RBI or in which not less than 40% shares (in terms of value) are held by the Government or the Reserve Bank or a corporation owned by the Reserve Bank. Ex. BEML, BHEL, BPCL etc. • Section 25 companies – A company registered under section 25 of the Companies Act, 1956, namely companies for promotion of commerce, art, science, religion, charity and prohibiting the payment of any dividends to its members. Ex: International Bible Society India, Association of Lady Entrepreneurs of Andhra Pradesh, Ravindranath Medical Foundation, etc.
  • 23. • A company without share capital - A company having no share capital and declared by the Central Board of Direct Taxes to be a company in which the public are substantially interested. • Nidhi or Mutual Benefit Society- A company which carries on, as its principal business, the business of acceptance of deposits from its members and which is declared by the Central Government under section 620A of the Companies Act to be a Nidhi or Mutual Benefit Society. • Company owned by a Co-operative Society - If it is company in which shares carrying at least 50% of the voting power have been allotted unconditionally to or acquired unconditionally by, and are throughout the relevant previous year beneficially held by, one or more cooperative societies; or • Listed Companies - If it is company which is not a private company as defined in Section 3 of the Companies Act, 1956 and equity shares of the company were, as on the last day of the relevant previous year, listed in a recognised stock exchange in India;
  • 24. Investment Company: • It means a company whose gross total income consists mainly of income which is chargeable under the heads ‘Income from House Property’, ‘Capital Gains’ and ‘Income from other sources’. Ex.: Larsen & Toubro Mutual Fund, Tata Investment Corporation
  • 25. Widely-held Company • A company in which the public are substantially interested is known as widely-held company.
  • 26. Closely-held Company : • A company in which the public are not substantially interested is known as a closely-held company. Ex.: Family owned companies
  • 27. Incidence Of Tax for Corporate Assessees Particulars Resident in India Non-resident in India Indian income Taxable in India Taxable in India Foreign income Taxable in India Not Taxable in India
  • 28. • Indian income is always taxable in India irrespective of the residential status of the taxpayer. • Foreign income is taxable in the hands of resident in India. Foreign income is not taxable in the hands of non-resident in India.
  • 29. Indian Income Any of the following three is an Indian income – • If income is received or deemed to be received in India during the previous year and at the same time it accrues or is deemed to accrue in India during the previous years. • If income is received or deemed to be received in India during the previous year but it accrues outside India during the previous year. • If income is received outside India during the previous year but it accrues or is deemed to accrue in India during the previous year.
  • 30. Foreign Income If the following two conditions are satisfied, then such income is ‘foreign income’- • Income is not received or not deemed to be received in India; and • Income does not accrue or does not deemed to accrue in India.