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RESIDENTIAL STATUS & SCOPE OF TOTAL INCOME (Sections 5, 6, 7 & 9 – Income Tax Act, 1961) Introduction In India, income tax is charged based on the residential status of a person, not only on citizenship. A person may be an Indian citizen but still be a non-resident for tax purposes, or a foreigner may become resident if they stay in India for a sufficient period. The residential status helps determine how much of a person’s income is taxable in India . These provisions are covered under Sections 5, 6, 7, and 9 of the Income Tax Act, 1961. Section 6 – Residential Status Section 6 defines how to decide whether a person is Resident or Non-Resident in India. The taxability of income depends on this classification. A. Residential Status of an Individual (Section 6(1)) An individual is Resident in India if they satisfy any one of the following conditions: The person has stayed in India for 182 days or more during the previous year, OR The person has staye...

PROFITS AND GAINS OF BUSINESS OR PROFESSION (Section 28 – Income Tax Act, 1961) 🌿 Meaning of Business or Profession Under the Income Tax Act, the term “Business” means any trade, commerce, or manufacture carried on with the motive of earning profit. The term “Profession” means activities that require intellectual or specialized skills , such as those of a doctor, lawyer, engineer, or chartered accountant. So, income earned through carrying on any business or profession is taxed under the head: 👉 “Profits and Gains of Business or Profession (PGBP)” 🧾 Section 28 – Basis of Charge Section 28 lists out what types of incomes are chargeable under the head “Profits and Gains of Business or Profession.” Let’s understand them one by one in simple language 👇 🏢 1. Profits from Any Business or Profession (Sec. 28(i)) The profits earned from carrying on any business or profession during the previous year are taxable. ✅ Example: Mr. A runs a textile shop and earns ₹5,00,000...