I have been on a project in London for an India-based company for the last two years. The company has now decided that I will work on two projects (one in London and another in India) and divide my time at both places. However, I will continue to receive my salary in London only. How will my tax be computed? It is highly likely that I maybe in India for more than 182 days. Kindly give some clarity.
Salary income for the period services are rendered in India will be taxable in India, irrespective of your residential status in India and location of payroll. However, tax exemption may be claimed under the Double Taxation Avoidance Agreement (DTAA) between India and the United Kingdom on satisfaction of the following conditions:
a. You qualify as “resident" of the United Kingdom;
b. The total physical presence in India does not exceed 183 days during the relevant financial year;
c. Salary is paid by a foreign employer;
d. Salary is not deductible in computing the profits of the employer in India;
e. You obtain a tax residency certificate from the United Kingdom tax authorities.
In your case, if the above conditions are not satisfied, the salary income received for the period services are rendered in India will be taxable in India.
If you qualify as “resident and ordinarily resident" in India, your global income will be taxable in India and, hence, even salary received for services rendered in London will become taxable in India. In case of double taxation, benefit under DTAA may be explored.
Can an Indian resident whose name is added in the non resident ordinary (NRO) account of his son or daughter have the same powers to operate the account? Are there any restrictions?
Under the exchange control law, an NRO account may be held jointly with residents on “former or survivor" basis. In case of “former or survivor" basis, the “former" alone can operate the account. If the “former" expires, the “survivor" can operate the account.
However, banks have been authorised to allow following operations on an NRO account under a power of attorney granted in favour of a resident by the non-resident account holder:
a. All local payments in rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank of India; and
b. Remittance outside India of current income in India of the non-resident individual account holder, net of applicable taxes.
The resident power of attorney holder is permitted to repatriate outside India funds held in the account only to the other account of non-resident individual account holder.
However, the resident power of attorney holder is not permitted to do the following:
a. Repatriate outside India funds held in the account to any other account;
b. Make payment by way of gift to a resident on behalf of the non-resident account holder;
c. Transfer funds from the account to another NRO account.
Sonu Iyer is tax partner and people advisory services leader, EY India. Queries at firstname.lastname@example.org