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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Disclaimer: “Neither this article nor the information contained herein shall in any way be construed as forming a contract or shall constitute professional advice required before acting upon any matter. CA Sharad Kumar Sharma has taken all due care in the preparation of this article for accuracy in its contents at the time of publication. However, no liability shall be accepted by him in the event of any direct, indirect or consequential damages arising out of or in any way connected with the use of this article or its contents. “
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