I am a US citizen and also an Overseas Citizenship of India card holder living in India for the last 12 years. I am planning to relocate to the US permanently in July next year. My stay in India for financial year (FY) 2020-21 would be less than 182 days but more than 60 days and also 365 days or more during the preceding four FYs. What will be my residential status in FY21?
You can test your residential status in the following manner. 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. In some cases, the period of 60 days above is changed to 182 days. This happens when: a) A citizen of India leaves India in the relevant FY for employment outside India or as a member of the crew of an Indian ship, or b) A citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during 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 conditions, you shall be considered a resident but not ordinarily resident in India. If you don’t meet any of the first conditions, you shall be a non-resident in India (NRI).
Based on the information provided and the conditions listed above, you are likely to be resident and ordinarily resident in India for FY21. As you are not a citizen of India, 60 days will not be replaced with 182 days. However, if you want your status to be non-resident in FY21, you must spend less than 60 days in India in the said FY.
My son is an NRI employed abroad. He has a non-resident ordinary (NRO) account. I have a debit card linked to this account. I use around ₹4 lakh per year as cash withdrawals. He also transfers around ₹2 lakh per year to my wife’s account. How will the amounts received from our son be treated for tax?
There is no tax implication for you or for your wife on receipt of money from your son. Gifts received from specified relatives (in this case, son to parents) are exempt from tax. However, do note that in case you or your wife decide to invest this sum and earn an income from it, such income will be taxable in India. It will have to be reported in your income tax return to be filed in India. Note that income up to ₹2.5 lakh is exempt from tax for those who are less than 60 years of age. The exemption limit is ₹3 lakh for those who are more than 60 but less than 80 years of age. For those who are more than 80 years of age, the exemption limit is ₹5 lakh.
Archit Gupta is founder and chief executive officer, ClearTax. Queries at firstname.lastname@example.org