Question 1 (b)
Taxable income as ROR, NOR and NR, and tax as ROR under the new regime
12 marks
- Time to write
- About 24 minutes
- Notes
- Crux notes
Question
Question 1 (b) · 12 marksFor the tax year 2026-27, Ms. Radhika has the following incomes.
| SN | Particulars | Amount (Rs.) |
|---|---|---|
| 1. | Savings bank deposits in Punjab & Sind Bank, Delhi: interest | 120000 |
| 2. | House property situated in Canada: income (Rs. 200000 deposited in a bank in Canada; the balance remitted to India) | 250000 |
| 3. | Shares held in Nestle India Co.: dividend income | 280000 |
| 4. | Hotel business at Melborne, controlled from India: profit | 300000 |
| 5. | Foreign income of the past, brought to India | 100000 |
| 6. | Interest from Mr. Andrew, a non-resident, received on a loan provided to him for a business that is carried on in India | 50000 |
Compute:
Her taxable income as ROR, as NOR, or as NR.
Her tax liability, as ROR, under the new tax regime. (12)
Paper note: Set under the Income-tax Act, 1961 for assessment year 2024-25 (previous year 2023-24); answered under the Income-tax Act, 2025 for tax year 2026-27, so the year term moves forward by 3 years and every date in the question moves forward by the same 3 years, so that intervals, holding periods and ages are as printed. Every figure and name is as printed. "Melborne" is as printed.
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- ComputeHead by head: each income under its head, exempt items marked exempt, then the deductions and the tax.
Write it in this order
- Read the data; note exactly what is asked 2 min
- 1 Treatment of each income by status 4 marks 7 min
- 2 Taxable income as ROR, NOR and NR 4 marks 7 min
- 3 Tax under the new regime and the rebate 4 marks 6 min
- Check: arithmetic, units (₹, %), final answer underlined 2 min
Try it first. About 24 minutes for 12 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
- The income from the Canadian house (₹2,50,000) is its computed income under the head Income from house property.
- No deduction under Chapter VIII is claimed: the default regime of section 202(1) applies, as part (ii) requires, and it is used for part (i) as well.
Treatment of each income (sections 5 and 9)
| Income | Where it accrues or is received | ROR | NOR | NR |
|---|---|---|---|---|
| 1. Savings bank interest, Punjab & Sind Bank, Delhi | Accrues in India | Taxable | Taxable | Taxable |
| 2. Income from the house in Canada (part later sent to India) | Accrues and is received outside India; remitting it later is not receipt in India | Taxable | Not taxable | Not taxable |
| 3. Dividend from Nestle India | Paid by an Indian company: accrues in India | Taxable | Taxable | Taxable |
| 4. Profit of the Melbourne hotel, controlled from India | Accrues outside India (read as received outside India: note 3); business controlled from India | Taxable | Taxable | Not taxable |
| 5. Past foreign income brought to India | Not income of this year | Not taxable | Not taxable | Not taxable |
| 6. Interest from Mr. Andrew (a non-resident) on a loan used for his business in India | Deemed to accrue in India (section 9(5)(a)(iii)) | Taxable | Taxable | Taxable |
(i) Taxable income for tax year 2026-27
| Particulars | ROR Rs. | NOR Rs. | NR Rs. |
|---|---|---|---|
| Savings bank interest | 1,20,000 | 1,20,000 | 1,20,000 |
| House property in Canada | 2,50,000 | — | — |
| Dividend from Nestle India | 2,80,000 | 2,80,000 | 2,80,000 |
| Hotel business at Melbourne | 3,00,000 | 3,00,000 | — |
| Past foreign income brought to India | — | — | — |
| Interest from Mr. Andrew | 50,000 | 50,000 | 50,000 |
| Taxable income | 10,00,000 | 7,50,000 | 4,50,000 |
(ii) Tax liability as ROR under the new regime (section 202(1))
| Particulars | Rs. |
|---|---|
| Total income | 10,00,000 |
| Tax: nil on ₹4,00,000; 5% of ₹4,00,000 = ₹20,000; 10% of ₹2,00,000 = ₹20,000 | 40,000 |
| Less: Rebate under section 156(2)(a) (total income does not exceed ₹12,00,000; rebate up to ₹60,000) | 40,000 |
| Tax after rebate | Nil |
| Health and Education Cess | Nil |
| Tax liability | Nil |
- Income from the Canadian house is taxed only to a resident and ordinarily resident person: it accrues and is first received outside India. Sending ₹50,000 of it to India later does not make it income received in India. The question does not say whether the ₹50,000 was first received abroad; it is read so. If not (it was first received in India), that ₹50,000 is taxable to the NOR and the NR as well: taxable income ₹8,00,000 as NOR and ₹5,00,000 as NR.
- Under the default regime the deduction for savings bank interest (section 153(2)(a), formerly section 80TTA) is not allowed, so the full ₹1,20,000 is taxed.
- The Melbourne hotel profit accrues outside India, and the question does not say where it is first received; it is read as first received outside India, so a non-resident is not taxed on it (section 5(2) reaches only income received or deemed received in India, or accruing or deemed to accrue in India). If not (it was first received in India), it is taxable to the NR too: taxable income ₹7,50,000 as NR, or ₹8,00,000 if the remitted ₹50,000 of note 1 was also first received in India. The ROR and NOR figures do not change.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Treatment of each income by status | 4 |
| 2 | Taxable income as ROR, NOR and NR | 4 |
| 3 | Tax under the new regime and the rebate | 4 |
| Total | 12 |
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