1. Which factors bring an individual within the scope of tax on
income and capital gains?
The Income Tax Act, 1961 ("ITA")
levies tax on income and capital gains. The general rule contained
in the ITA is that Indian residents are taxable on their worldwide
income and non-residents are taxable only on Indian sourced income.
Accordingly, two factors which bring a taxpayer within the scope of
Indian tax are, residence of the taxpayer and the location of the
sources of his income:
(a) Residence:
Taxable individuals are divided into three categories based on
their residential status i.e. (i) resident and ordinarily resident;
(ii) resident but not ordinarily resident
("RNoR"); and (iii) non-resident.
Residential status is generally determined based on an
individual's physical presence in India without having regard
to the individual's intention to reside in India, domicile or
citizenship in a given year. The Indian financial year extends from
April 1st to March 31st.
