## Scope of Total Income [Section 5]

### A. Individual & HUF

Status	Taxability
ROR	World Income is taxable in India (Indian + Foreign income).
RNOR	Indian Income + Income from business controlled from India / profession set up in India.
NR	Only Indian Income is taxable.

### B. Other Assessees (Firm, Company, AOP, etc.)

Status	Taxability
Resident	World Income is taxable in India.
Non-Resident	Only Indian Income is taxable.

### Detailed Heads of Income

#### Resident & Ordinarily Resident (ROR)

Heads of Income	Taxable?
Income received in India OR deemed to be received in India	YES
Income that accrues/arises in India OR is deemed to accrue/arise in India	YES
Income that accrues/arises outside India (whether or not remitted to India)	YES

#### Resident but Not Ordinarily Resident (RNOR)

Heads of Income	Taxable?
Income received / deemed received in India	YES
Income that accrues/arises in India / deemed to accrue/arise in India	YES
Income from business controlled from India OR profession set up in India (even if it accrues abroad)	YES
Other foreign income	NO

#### Non-Resident (NR)

Heads of Income	Taxable?
Income received / deemed received in India	YES
Income that accrues/arises in India / deemed to accrue/arise in India	YES
Foreign income	NO

Worked example

### Example 1

Example (ROR): Mr. A is ROR. He earned rent of ₹2,00,000 from a property in London (received in London, not remitted).

Solution: As ROR, world income is taxable → ₹2,00,000 is taxable in India.

### Example 2

Example (RNOR): Mr. B (RNOR) has business income of ₹5,00,000 from a business in Dubai controlled from India.

Solution: Income from business controlled from India is taxable for RNOR. → ₹5,00,000 is taxable.

### Example 3

Example (NR): Mr. C (NR) earned salary in USA for services rendered in USA.

Solution: Foreign income not received in India → Not taxable in India.

⚠️ Common exam mistakes

For NR, taxing income merely because it is remitted later to India (remittance ≠ receipt).
For RNOR, taxing all foreign income — only specific categories (business controlled from India / profession set up in India) are taxable.
Forgetting that ROR pays tax on world income regardless of receipt location.
Confusing 'deemed to be received' with actual remittance — they are different concepts.

Bare-Act text Section 5 · Income-tax Act, 1961 · click to expand

(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which— (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) accrues or arises to him outside India during such year… (2) In case of a non-resident, total income includes only (a) and (b) above.

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Scope of Total Income – Section 5

Worked example

⚠️ Common exam mistakes