I am 49 years old and a green card holder. Due to lack of opportunities in the US, I decided to shift to India. I have found a job in a private company in Bangalore and have been working since March this year. Is there any tax exemption for people who work outside the US?
Taxability in India is determined based on the residential status of the person in India. The Indian tax laws prescribe certain basic conditions for determining the residential status of a person in India. The basic conditions outline that a person is said to be a resident for the financial year if he is in India for a period of 182 days or more in that year; or he is in India for 60 days or more during the relevant year and 365 days or more during four years immediately preceding that year. Further, a resident is classified as a resident and ordinarily resident in India (ROR) or resident but not ordinarily resident (RNOR) in India or a non-resident (NR) in India.
A person who qualifies to be an ROR in India during the relevant financial year (starting 1 April to 31 March) is taxed in respect of his global income. However, a person who is RNOR is taxed only in respect of his income deemed to accrue or arise/deemed to be received in India.
A resident is deemed to be RNOR in India if he is a non-resident in India for 9 out of 10 years immediately preceding the relevant financial year or has been in India for less than 730 days during the seven years immediately preceding the relevant financial year in addition to the basic conditions prescribed above. If he does not satisfy any of the conditions for being an RNOR then he is taxable as an ROR. Also, any person who does not qualify for the basic conditions prescribed above is classified as NR.
In case you qualify to be NR/RNOR in India during FY11, ) based on your period of stay in India, the salary income earned in India during March 2011 shall be taxable in your hands since the income earned on the salary income from your employer is being received in India. Please note that if the total income earned by you does not exceed the maximum amount chargeable to tax, such income shall be exempted from tax. In FY12, if you qualify to be ROR, only then your global income (including income earned in the US) shall be taxable in India. The taxability of your income in the US shall have to be determined as per the provisions of the US taxation laws. However, you may resort to the beneficial provisions of the tax treaty between India and the US to avoid double taxation in both the countries.
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