Scope of total income: residents taxed broadly with limited foreign income inclusion for not ordinarily resident persons.
Section 5 sets the scope of total income by applying receipt and accrual tests: residents are taxed on income received or deemed received in India, income accruing or arising or deemed to accrue or arise in India, and foreign income only in limited cases for a person who is not ordinarily resident (foreign income included when derived from a business controlled in India or a profession set up in India). Non residents are taxed on income received or deemed received in India and income accruing or arising or deemed to accrue or arise in India. The section also prevents balance sheet inclusion from constituting receipt and bars double inclusion on accrual and receipt bases.