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Business News/ Money / Personal Finance/  Taxability depends on the residential status
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Taxability depends on the residential status

An individual qualifying as resident and ordinarily resident (ROR) is taxable on his worldwide income in India and is required to report all foreign assets in the India income tax return (ITR)

Taxability depends on the residential status.Premium
Taxability depends on the residential status.

I worked in the Gulf for eight months in FY21 with a work permit. My gross income in India will exceed 15 lakh, but the net taxable income will be less than 8 lakh after availing of income tax deductions. Will I qualify as a non-resident Indian (NRI) under the new rules for FY21? Also, will I have to pay tax on my foreign income?

—Srinivasan Subbaraman

Taxability in India depends on residential status, source of income and place of receipt of income. Residential status is determined on the basis of physical presence of an individual in India during a financial year (FY), including work days and non-work days, and the preceding 10 FYs. Residential status needs fresh determination for each year.

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An individual qualifying as resident and ordinarily resident (ROR) is taxable on his worldwide income in India and is required to report all foreign assets in the India income tax return (ITR). Also, the income earned from such foreign assets during the relevant year along with the nature of income and head of income under which such income has been offered to tax in the India ITR needs to be reported in relation to each foreign asset.

An individual qualifying as non-resident (NR) or resident but not ordinarily resident (RNOR) has to pay tax on the following incomes: income accruing or arising in India; income deemed to accrue or arise in India; and income received or deemed to be received in India.

Additionally, in case of RNOR, income arising outside India is taxable if it is derived from a business controlled in or a profession set up in India.

In your case, you will need to first determine your residential status. Assuming you are an Indian citizen, you may qualify as NR in India if: you have left India for employment during the relevant year; and your physical presence in India is less than 182 days during the year.

If you satisfy these conditions, you may qualify as NR for FY21 and your income earned and received outside India will not be taxable.

Read the full answer on livemint.com/money

Sonu Iyer is tax partner and people advisory services leader, EY India. Queries at mintmoney@livemint.com

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Published: 29 Dec 2020, 06:43 AM IST
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