V In general, tax can be defined as a levy or other type

of a financial charge or fee imposed by state or

central governments on legal entities or individuals
V This is a compulsory charge levied by a
governmental against the individuals and corporate
on their income on yearly basis.
V Taxes are most often levied as a percentage, called
the 
 
V Taxes in India are levied by the Central
Government and the State Governments. Some
minor taxes are also levied by the local authorities
such the Municipality or the Local Council
 Tax

uirect Tax Indirect Tax

Service Tax
Personal Income
Tax
Excise uuty
Corporate Income
Tax
Custom
V d direct tax is one paid directly to the
government by the persons or corporate on
whom it is imposed.

V Types:
À Personal Income Tax
À Corporate Income Tax
V Indirect Tax is collected by intermediaries
who turnover the proceeds to the
government and file the related tax return.

V Service Tax
V Excise uuty
V Custom
ñ
 
V Service Tax was first brought into force with effect
from 1 July 1994.
V Service Tax is a central tax imposed on consumers of
selective services.
V Some of the major services that come under the
ambit of Service Tax are.
À i) Telephone ii) Stock Broker iii) Insurance iv)
Courier agencies v) ddvertising agencies vi) dir
travel agents vii) Banking and other financial
services
ñ
 

V The Person who render the services more than ¦

10,00,000 in the FY 2008-09. He is liable to collect the
Service Tax from the parties, he can adjust in his
payable service tax amount in credit taken amount.
V Infosys Ȃ ICICI Bank
V Tata Motors -
M
 :

V It is a tax on articles produced or manufactured in the

country.
V Excise duty is an indirect duty which the manufacture
or producer passes on the ultimate consumer
V Excise duty, though it becomes payable on the
manufacture of goods, is collected at the time of
removal of goods from the factory
Ã
 

V Customs duty is a tax collected on goods imported

into or exported out of the boundaries of a country
V It is bind by the Custom Tariff dct 1975
i) Find out the prevailing service tax rate,
Income tax rate, custom, excise etc.
ii) Will custom duty charged for inter-state
transaction(import & export).
V You have lived in India all your life and go to another
country for work. uo you know that after a certain
period, your residential status changes?

V Similarly, do you know that if you have been away

from India for a while, and come back to India, your
residential status changes?
 Ñ
  


Ñ
   Ñ
 
Ñ
   Ñ
 
ÿ


 
ÿne of the basic condition and both the additional
conditions.
 ÿ


 
ÿne who fulfils one of the basic conditions and one
or none of the additional condition.

 
Fulfilling none of the basic condition. ÿr Non
fulfilling any basic condition.

à 

V ÿne should be in India during the relevant previous

year for a period of 182 days or more.

V ÿne should be in India for a period of 60 days or

more during the relevant previous year and 365 days
or more during 4 previous years immediately
preceeding (prior) to the previous year.
  Exception to the 2nd basic condition of
residing -

  
  .
V ÿne should be in India 182 days instead of 60 days if
he/she leaves India during the previous year for the
purpose of employment outside India.
V ÿne should be in India for 182 days instead of 60
days if he/she leaves India during the previous as a
member of crew of an Indian ship.
V ÿne should be in India for 182 days instead of 60
days if he/she is an Indian citizen (or Indian origin)
who comes to India on a visit during the previous
year.
 Ã 

V ÿne should be a resident of India for at least 2 years

out of 10 years immediately preceding the relevant
previous year.

V ÿne should have stayed in India for a period of 730

days or more during 7 years immediately preceding
the relevant previous year.
Problem 1
Mr. Subroto Bagchi left India for the first time on
May 20,2005. uuring the financial year 2007-08, he
came to India once on May 27 for a period of 53
days. uetermine his residential status for the d Y
2008-09.
Problem 1

Sol. Since X comes to India only for 53 days in the

previous year 2007-08, he does not satisfy any of
the basic conditions. He is, therefore, nonresident
in India for the dY 2008-09
Problem 2
Mr. Gopinath, an Indian citizen, leaves India for the
first time on Sept 20, 2005 for the purpose of
employment. He comes to India for a visit of 146
days on dpril 10, 2006. He comes back on May 16,
2007. Find out the residential status of X for the d Y
2008-09.
Problem 2

Since Mr. Gopinath in India for a period of 321 days

during the previous year 2007-08, he is resident in
India. Besides, he is in India for 2145 days during 7
years prior to 2007-08 (i.e., during dpril 1, 2000 and
march 31, 2007). Moreover, he is resident in India
for 8 years out of 10 years. He is, therefore, resident
and ordinarily resident in India for the d Y 2008-
09(Gopinath satisfies two additional conditions)
V d Hindu undivided family is said to be
resident in India if control and management
of its affairs is wholly or partly situated in
India.
V d Hindu undivided family is non-resident in
India if control and management of its affairs
is wholly situated outside India.
V dn Indian company is always resident in India.
V d foreign company is resident in India only if,
during the previous year, control and
management of its affairs is situated wholly
in India.
V d 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.
V Incidence of tax on a taxpayer depends on his
residential status and also on the place and
time of accrual or receipt of income .
V Indian Income
V Foreign Iincome
 ÿ

 
   
 

  
Particulars

  



   
If it is business income and
business is controlled wholly Taxable Taxable in India Not taxable in India
or partly from India in India

If it is income from profession Taxable

which is set up in India in India Taxable in India Not taxable in India

If it is income from profession Taxable

Not taxable in India Not taxable in India
which is set up outside India in India

dny other foreign income (like Taxable Not taxable in India Not taxable in India
salary, rent, interest, etc.) in India
d C Prashanth Kumar
Lecturer
City College
Bangalore

prashanthkumar.ac@gmail.com