Residence-based taxation: Direct Taxes Code taxes residents on worldwide income and sets comprehensive computation and compliance rules.

The Code charges income-tax primarily on the basis of residence, making residents liable on their total income worldwide and non-residents on income accruing or received in India; it defines residence, deemed accruals and receipts, classifies income into ordinary and special sources with five heads for ordinary income, prescribes detailed computation rules for business profits, capital allowances, capital gains and specified deductions, and establishes comprehensive compliance, transfer pricing, anti-avoidance and administrative mechanisms including audits, search and seizure, and delegated rule-making.

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