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T. Banusekar

I WORK for a foreign shipping company on contract basis. Income is paid to me by the company for services rendered and I stay outside India as part of my job. In the year when I stay outside India for 183 days or more, the income earned while rendering services outside India is not taxable. I now propose to join the services of another foreign shipping company. This company will pay me while I am on the ship and also for my leave period when I am in India.

In my opinion, the salary received for the leave period will not be taxable in India if I am a non-resident, as the mode of receipt in either case — whether I am on the ship or on leave — will be through a credit into my bank account in India. This I understand will be the position on the basis of Section 9(1)(ii) read with Section 5. Is this correct?

Lalit

Reply

You have indicated that the salary will be received by you through a credit into your bank account in India. By virtue of Section 5 all income received in India will be taxable in India irrespective of your residential status. This would mean that the sums received by you while you are on board the ship and also while you are on leave will be taxable in India since the income is received in India.

The provisions of Section 9(1)(ii) will not be applicable since the taxability will be determined on the basis of receipt in India and not on the basis of whether the income accrues or arises in India.

Mail your queries to taxtalk@thehindu.co.in or by post to Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002.

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