If you are a citizen of India and you have left India for employment abroad, and you have spent less than 182 days in India, you may be considered an NRI for tax purposes
An employee (resident of India) is on work deputation in the UK. The income earned in the UK is already taxed by the employer. When the employee returns to India and his residency in India is more than 182 days in a financial year, does he need to pay tax on the income earned only in India? What is the taxable income when employee stays in India for more than 60 days but less then 90 days. Is it only earnings made in India or will it include UK earnings as well which are already taxed by the UK?
Whether your income will be taxed in India depends upon the source of such income and your residential status in India. You need to first establish your residential status for the financial year (FY) in question. Note that residential status has to be determined for each year.
You must meet any of the following conditions and both the additional conditions:
Conditions: a) you are in India for 182 days or more in the FY; or b) you are in India for 60 days or more in the FY and 365 days or more in the four FYs immediately preceding the relevant FY. Additional conditions: you are a resident in India in two of the 10 FYs immediately preceding the relevant FY; and you are in India in the seven years immediately preceding the relevant FY for 729 days or more.
If you meet any of the first set of conditions and both the additional conditions, you shall be considered a resident in India. If you meet any of the first conditions but do not meet the additional ones, you shall be considered a resident but not ordinarily resident (RNOR) in India. If you do not meet any of the first conditions, you shall be a non-resident in India (NRI).
If you are a citizen of India and you have left India for employment abroad, and you have spent less than 182 days in India, you may be considered an NRI for tax purposes.
When you are resident and ordinarily resident in India, your global income is taxable in India. You are also required to report any foreign assets and income earned from them in your tax return.
An NRI or RNOR has to pay tax on income that accrues or arises in India or income that is received in India.
Please check your status for the FY in question. If you are resident in India, you have to report and pay tax on your global income. In this case, you may be able to take benefit of the double tax avoidance agreement to ensure the same income is not doubly taxed.
Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at firstname.lastname@example.org