Residential status has considerable bearing for charging of income tax. The following incomes of an assessee having ‘resident’ status are taxable in India:

•    Income which is received or deemed to be received in India in the previous year by him or on his behalf and the Revenue has to prove that any income is received by an assessee in India.

•    Income which accrues or arises or is deemed to accrue or arise to him in India during the previous year. The words “accrues” and “arises” are used in contradistinction to the word “receive”. Income is said to be received when it reaches the assessee. It is said to accrue or arise when the right to receive the income becomes vested in the assessee. But, a mere claim to a profit or a liability is not sufficient to make the profit accrue.

Income can be said to accrue when it is due. Postponement of date of payment has a bearing only in so far as the time of payment is concerned, but it does not affect the accrual of income. Moreover, any income or remuneration for services rendered in India and the rest period or leave period which is preceded and succeeded by services rendered in India and which forms part of the service contract of employment, shall be regarded as income earned in India.

•    Incomes which accrues or arises to him outside India during the relevant previous year.

Thus, simply in case of a resident, income earned, arising or received by him anywhere in the world, is taxable in India. However, it is subject to the Double Tax Avoidance Agreements and Unilateral relief in certain cases.

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