Certain incomes are deemed to accrue or arise in India even though they may actually accrue or arise outside India. This is applicable to all assessees irrespective of their residential status, nationality, domicile and place of business. The incomes which are deemed to accrue or arise in India are as under:-

1. All income accruing or arising, whether directly or indirectly, through or from any business connection in India. If all the operations of a business are not carried out in India, the income deemed under this clause to accrue or arise in India shall be only a reasonable part of income from such business;

2. All income through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India;

3. Income chargeable under the head “Income from Salaries”, if it is earned in India. Income chargeable under the head “Income from Salaries” shall be regarded as income earned in India if the income is payable for service rendered in India and the rest period or leave period, which is preceded or succeeded by, services rendered in India and forms part of the service contract of employment;

4. Salary payable by the Government to a citizen of India for service outside India;

5. Dividend paid by an Indian company outside India;

6. Income by way of royalty and fees for technical services payable by –

a. Government of India; or

b. A person who is a resident in India and the payment is relatable to any other source of income (other than the payment is relatable to a business or profession or any other source carried on by the payer outside India); or

c. A person who is a non-resident and the payment is relatable to a business or profession in India or any other source carried by the payer in India (other than the payment is relatable to any other source of income).

7. Income by way of interest payable by –

a. Government of India; or

b. A person who is a resident in India and the interest is payable in respect of any debt incurred or moneys borrowed and used by the payer for any other purpose (other than for carrying on business or profession outside India or earning any income outside India); or

c. A person who is a non-resident and the interest is payable in respect of any debt incurred or moneys borrowed and used by the payer for carrying on business or profession in India (other than for any other source of income).

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