Money earned outside the country may not be taxed in India

Mere remittance of amount from your overseas bank account to the one in India is not taxable, as the same does not qualify to be an income in India


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I worked in New Zealand for 5 years, from March 2011 to March 2016. I have now moved back to India. I have about 50,000 New Zealand dollars (NZD) in my bank account there. I want to transfer that amount to my bank account in India soon. What would be the tax implications? The amount in my bank is from my salary after paying taxes there.

—Siddhesh R.

Taxability in India depends on the following factors:

Source of income

Residential status of the tax payer in India: it is determined on the basis of the physical presence of an individual in India during the relevant financial year (FY) or previous 10 FYs.

Place of receipt of income: Any income received in India is taxable on receipt basis.

You may qualify as Not Ordinarily Resident (NOR) if you spend more than 182 days in India, based on the assumption that you have not spent more than 730 days in the last 7 years in India. With this residential status, you can be taxed only on income earned or received in India. Salary income in your bank account in New Zealand, earned for the period of services rendered there, will not be considered as earned in India. The first receipt of salary was in New Zealand, when you qualified as ‘non-resident’ in India. Mere remittance of amount from your New Zealand bank account to the one in India is not taxable, as the same does not qualify to be an income in India.

I invested in the initial public offering (IPO) of an Indian company through my non-resident external (NRE) account last year. I would like to book profits now. How will it be taxed? I am a non-resident Indian (NRI) living in the US.

—Harinder Bawa

Capital gains from sale of shares of an Indian company are taxable in India. Capital gain on sale of equity shares listed on a recognised stock exchange in India will be classified as long term if held for more than 12 months. Long-term capital gains (LTCG) from sale of listed equity shares are tax exempt, provided the securities transaction tax has been paid.

Short-term capital gains (STCG) on sale of listed equity shares are taxable at 15% plus applicable surcharge and education cess, provided securities transaction tax has been paid, i.e., an effective tax of 17.77%. As you are an NRI, the capital gains from share sale would be taxed as follows: nil for LTCG, and 15% (plus applicable surcharge and education cess) for STCG.

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