Introduction
The Income Tax Act 1961 is the legal framework governing taxation related matters in India. According to section 9 of the Income Tax Act, any income received by a taxpayer, either in cash or in kind, that is deemed to accrue or arise in India shall be liable to tax. The income deemed to accrue or arise in India may be from various sources, including salaries, property income, business income, capital gains, foreign income, and winnings from horse racing and lottery, among others. This article will analyze all the sub-sections of section 9 of the Income Tax Act, 1961, as well as the kinds of income that are deemed to accrue or arise in India as per this section of the Act.
Analysis
Sub-section (1) of Section 9 of the Income Tax Act, 1961, states that any income arising or accruing, directly or indirectly, through or from any business connection in India, or from any property in India, or from any asset or source of income in India, or through the transfer of a capital asset situated in India, shall be included as income deemed to accrue or arise in India, in the hands of the taxpayer. Sub-section (2) of this section further states that income, which accrues or arises, directly or indirectly, outside India without any business connection in India, shall be included as income deemed to accrue or arise in India, if the creating or acquisition of the asset or right or the earning of such income had any relation with the activities or operations of a business in India.
The types of income deemed to accrue or arise in India, as per section 9 of the Income Tax Act, 1961, can be broadly divided into three categories. First, income sourced from salaries. According to sub-section (1) of section 9 of the Act, any income arising or accruing directly or indirectly through or from any business connection in India, or from any property situated in India, or through the transfer of a capital asset situated in India, shall be deemed to accrue or arise in India. This includes salaries received from an employer situated in India, income from any employment or profession carried on in India, pensions received from a person residing in India, salaries received from the government of India, and salaries received from a foreign government for services rendered in India.
Second, income sourced from property. This encompasses income from house property, which includes rents and profits from lands, buildings, leases, mines, quarries, forests, among others. It also includes income from agricultural lands, either from the tenant or from the owner, income from royalties, income from moveable or immoveable property, income from a capital asset situated in India, and income from foreign exchange fluctuations.
Third, income sourced from business. This includes income from any business connection in India, any profession or vocation in India, any business or venture carried on in India, or any business activity or venture which has its source in India, or any income derived from stocks and shares of a company or mutual fund situated or registered in India. It also includes income from divisible profits of an Indian company, dividend distributes to an Indian resident company, dividends declared by a company or mutual fund in India, and income from commissions, with or without the transfer of property, arising out of services rendered in India.
Conclusion
In conclusion, the Income Tax Act 1961 is the legal framework governing taxation in India. Section 9 of the Income Tax Act, 1961, deals with the types of income that are deemed to accrue or arise in India. As per this section, income received by a taxpayer, either in cash or in kind, that is deemed to accrue or arise in India shall be liable to tax. This article has provided an analysis of all the sub-sections of section 9 of the Income Tax Act, 1961, as well as the kinds of income that are deemed to accrue or arise in India as per this section of the Act.
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FAQs
(1)The following incomes shall be deemed to accrue or arise in India- (i)all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, [* * *] [ Certain words omitted by Act 66 of 1976, Section 4 (w.e.f. 1.6.
What is explanation 2 of section 9? ›
(2) Notwithstanding anything contained in sub-section (1), any pension payable outside India to a person residing permanently outside India shall not be deemed to accrue or arise in India, if the pension is payable to a person referred to in article 314 of the Constitution or to a person who, having been appointed ...
What is the 9B of Income Tax Act? ›
Under Section 9B of the Income Tax Act, income earned from the transfer of certain capital assets is subject to tax in India. The rate of tax applicable to such income will depend on various factors, such as the nature of the capital asset, the duration of ownership, and the taxpayer's residential status.
What is an example of income deemed to accrue or arise in India? ›
Any income which arises from any property movable or immovable, tangible or intangible which is situated in India, is deemed to accrue or arise in India. Example: R who lives in London, has a house property situated in India which has been given by him on rent.
What is Section 9 5 of the Income Tax Act? ›
Compliance and return filing for e-commerce operators under Section 9(5) Where services, including housekeeping, accommodation, restaurant and passenger transport services, are supplied through an e-commerce operator, the GST liability is to be borne by the e-commerce operator.
What is DTAA between India and UK? ›
What is DTAA Between India and UK? DTAA between India and the UK was first signed and introduced on 26 October 1993. It is a written agreement signed between both countries that lays out the rules, regulations, and provisions of taxation between the contracting countries.
What is the summary of Section 9? ›
Article I, Section 9 specifically prohibits Congress from legislating in certain areas. In the first clause, the Constitution bars Congress from banning the importation of slaves before 1808. In the second and third clauses, the Constitution specifically guarantees rights to those accused of crimes.
How does Section 9 work? ›
Section 9 Powers Denied Congress
No Bill of Attainder or ex post facto Law shall be passed. No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken. No Tax or Duty shall be laid on Articles exported from any State.
What does section 9 clause 3 mean? ›
Clause 3, Bills of Attainder and Ex Post Facto Laws
"Clause 3: No Bill of Attainder or ex post facto Law shall be passed." Explanation: A bill of attainder is a way that a legislature acts as a judge and jury, declaring that a person or group of people are guilty of a crime and stating the punishment.
What is Section 9 H of the Income Tax Act? ›
Section 9H and paragraph 40 of the Eighth Schedule of the Income Tax Act No. 58 of 1962 ('the Act') determines that a person is deemed to dispose of all of his assets (bar a few exceptions) at market value when that person ceases to be a South African resident or passes away, respectively.
Generally, an underpayment penalty can be avoided if you use the safe harbor rule for payments described below. The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, or.
What is the Millionaire tax Act? ›
The Ultra-Millionaire Tax Act would create a fairer economy through: A 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. A 1% annual surtax (3% tax overall) on the net worth of households and trusts above $1 billion.
Is income accrued in India taxable? ›
As per the ITA 1961, income is deemed to accrue or arise in India if it is received in India or it is received or accrues or arises to a person in India. Income tax is applicable on all types of income whether it is earned, received in India or abroad.
Should I pay tax for foreign income in India? ›
If you are a resident, you will have to pay tax for income earned in India and abroad, but as an NRI you don't pay tax for foreign income. Here's how to find out about your residency status, taxable income, deductions and exemptions available, and the ITR forms you need to use.
What is the meaning of deemed income in tax? ›
Income which is considered to be available for use by an individual regardless of actual receipt.
What is Section 9C of Income Tax Act? ›
Section 9C of Income Tax Act essentially contains a 'safe harbour' provision in terms of which the gains from the disposal of 'qualifying shares' will be deemed to be of a capital nature if the owner held such shares for a continuous period of 3 (three) years.
What is Section 139 9 of the Income Tax Act 1961? ›
In these situations, your return is labelled as a 'defective return,' and the income tax department will issue a notice of defective return as per Section 139(9). This notice aims to help you correct any mistakes. However, if these issues aren't fixed promptly, they could lead to some undesirable consequences.
What is Section 13 9 of the Income Tax Act? ›
Under Section 13(9) of the Income Tax Act 1947, tax exemption is granted when all of the following 3 conditions are met: The foreign income has been subject to tax in the foreign jurisdiction from which it is received (known as the 'subject to tax' condition).
Which section of the Income Tax Act 1961 deals with the meaning of the term long term capital assets? ›
Section 2(29A) of the Act defines 'long-term capital asset' as capital asset which is not a short-term capital asset. Transfer of a short term capital asset [Para 3.3] gives rise to 'Short Term Capital Gains' (STCG) and transfer of a long term capital asset gives rise to 'Long Term Capital Gains' (LTCG).
