Under the Income-tax Act, 2025, which of the following statements are correct? A. If a company is an…
Under the Income-tax Act, 2025, an Indian company is a domestic company under Section 2(42)(i), so statement A is correct. Section 2(46) defines a foreign company as a…
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Under the Income-tax Act, 2025, which of the following statements are correct?
A. If a company is an Indian company, it will automatically be considered as a domestic company.
B. Foreign company means a company which is not a domestic company.
C. The residential status of an Indian company can be non-resident in India.
D. The residential status of a foreign company can never be resident in India.
E. Foreign income is taxable in the hands of a company resident in India.
Answer and explanation
Correct answer D
Under the Income-tax Act, 2025, an Indian company is a domestic company under Section 2(42)(i), so statement A is correct. Section 2(46) defines a foreign company as a company which is not a domestic company, so statement B is correct. Under Section 5(1), the total income of a resident includes income that accrues or arises to it outside India. The relief for a person 'not ordinarily resident' under Section 6(13) is available only to individuals and Hindu undivided families, not to companies, so statement E is correct. Statement C is wrong because under Section 6(10)(a)(i) an Indian company is always resident in India. Statement D is wrong because under Section 6(10)(a)(ii) a foreign company is resident in India in a tax year if its place of effective management is in India in that year (formerly ss. 2(22A), 2(23A), 5 and 6(3) of the Income-tax Act, 1961). The correct combination is therefore A, B and E only.
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