Title MS (Session 2).pdf ✅

IPR & INCOME TAX
INCOME TAX BASICS
• Income tax is a direct tax levied on ‘income’ earned in a Financial Year (“FY”) (April 1 to March 31). • The scope of ‘income’ that is taxable in India is different for two categories of ‘person’– • (1) a ‘person’ resident in India (“Resident”); and • (2) a ‘person’ not a resident in India (“Non-resident”) • Resident - Worldwide’ income’ taxable • Non-resident – Following income taxable • ‘income’ received or is deemed to be received in India in the FY • ‘income’ accrues or arises or is deemed to accrue or arise in India during the FY
• Taxation of non-residents (1) • India has entered into bilateral tax treaties with various countries (“Tax Treaty”) • A non-resident taxpayer can avail the benefit of Tax Treaty if it is more beneficial in their taxation vis-à-vis the Income Tax Act (“IT Act”) (such as difference in scope of definition/ reduced tax rate) • Section 9 – Income deemed to accrue or arise in India • All income accruing or arising through a ‘business connection’ in India (corollary to the concept of ‘permanent establishment’ in the Tax Treaty) or the transfer of a capital asset situated in India • If no ‘business connection’ • Income to qualify as a specific income which is deemed to accrue or arise in India such as dividend income, interest income, or royalty income amongst others