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Your tax is determined by residential status

If an income has been earned in India, it will be taxable here, even if you are a tax resident of another country

I am an Indian resident who relocated to the UK in November as my wife is pursuing higher studies there. I got a Tier 2 general visa and will be in the UK for two-three years. I will continue to work for my current company in India. Will I need to declare my India income in the UK? I will be paying tax on my India income (salary plus rent received from a house I own) in India itself. If I remit some amount from my Indian account to my own or my wife’s UK account, will it be taxed?

-VG

To understand your tax position under UK law, please consult a UK tax adviser.

Your position as per Indian law is as follows: How your income will be taxed depends upon where your residential status is for tax purposes and also where the source of such income is.

If an income has been earned in India, it will be taxable here, even if you are a tax resident of another country.

You can test your residential status in the following manner. Note that residential status must be determined for every financial year (FY) separately for the tenure mentioned by you above.

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 in India. If you do not meet any of the first conditions, you shall be a non-resident in India.

From the conditions listed above, you are likely to be a resident of India for tax purposes in the first year and may be even in the second year, therefore your entire income earned anywhere in the world is likely to be taxed in India.

You are allowed to repatriate money from India up to $1 million per FY. However, you will be required to submit certain declarations and a certificate from a chartered accountant in India to the transferring bank so that they can initiate the transfer.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com

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