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Business News/ Money / Calculators/  E-filing mandatory for taxable income more than `5 lakh
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E-filing mandatory for taxable income more than `5 lakh

The form depends on the nature of income earned

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What is double taxation avoidance agreement (DTAA), and how can I use its provisions? I will be moving to Dubai in December this year for work, and am likely to remain there for around three years.

—Brinda Seth

DTAA is an agreement between two countries with an objective to avoid taxation of the same income in both the countries. I presume that you would be leaving for the UAE in December during the financial year 2015 and you have been in India during the FY prior to December and all the preceding FYs (10 years). On the basis of this presumption:

•Your stay in India in FY15 exceeds 182 days;

•You were a resident of India for more than one FY out of 10 preceding FYs; and

•Your aggregate stay in India for the past seven FYs exceeds 729 days.

Accordingly, you would qualify to be a resident and ordinarily resident (ROR) as per the Indian tax laws for FY15.

Being an ROR, you would be taxed in India on your global income. Taxes (if any) paid on the income earned in the UAE (being taxable in India) could be claimed as credit against your India tax liability in accordance with the DTAA between the countries.

In the subsequent years, if we were to presume that your stay in India on account of your visit here does not exceed 182 days during an FY, you would be a non-resident under the tax laws of India.

Further, if you become a resident of the UAE, then you would be eligible to claim the benefits under the India-UAE DTAA.

As per the said DTAA, interest earned in India is chargeable to tax at a beneficial rate of 12.5%. Similarly, any gains arising from sale/transfer of property other than immovable property and shares of an Indian company are taxable only in the country in which the taxpayer is a resident.

If you qualify to be a resident of the UAE, any interest you earn from India would be taxable at a beneficial rate of 12.5%. Gains from transfer of any property in India (other than immovable property and shares of an Indian company) would be taxable only in the country of your residence (UAE).

When should an NRI file income tax return?

—Viji Jose

Those whose income exceeds the maximum amount that’s not chargeable to income tax have to furnish return of income (ROI) on or before the due date (i.e. 31 July of every FY).

The form depends on the nature of income earned. You can file the ROI either manually or electronically.

However, if the non-resident Indian (NRI) claims any tax relief under DTAA, or if the individual’s total taxable income is more than 5 lakh, it is mandatory to file electronically.

Queries and views at mintmoney@livemint.com

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Published: 13 Nov 2014, 06:55 PM IST
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