An worker (resident of India) is on work deputation within the UK. The revenue earned within the UK is already taxed by the employer. When the worker returns to India and his residency in India is greater than 182 days in a monetary yr, does he have to pay tax on the revenue earned solely in India? What’s the taxable revenue when worker stays in India for greater than 60 days however much less then 90 days. Is it solely earnings made in India or will it embody UK earnings as effectively that are already taxed by the UK?
—Suman Rathore
Whether or not your revenue will likely be taxed in India relies upon upon the supply of such revenue and your residential standing in India. It is advisable first set up your residential standing for the monetary yr (FY) in query. Be aware that residential standing must be decided for every year.
You have to meet any of the next circumstances and each the extra circumstances:
Situations: a) you might be in India for 182 days or extra within the FY; or b) you might be in India for 60 days or extra within the FY and 12 months or extra within the 4 FYs instantly previous the related FY. Further circumstances: you’re a resident in India in two of the ten FYs instantly previous the related FY; and you might be in India within the seven years instantly previous the related FY for 729 days or extra.
If you happen to meet any of the primary set of circumstances and each the extra circumstances, you shall be thought-about a resident in India. If you happen to meet any of the primary circumstances however don’t meet the extra ones, you shall be thought-about a resident however not ordinarily resident (RNOR) in India. If you don’t meet any of the primary circumstances, you shall be a non-resident in India (NRI).
In case you are a citizen of India and you’ve got left India for employment overseas, and you’ve got spent lower than 182 days in India, you might be thought-about an NRI for tax functions.
If you find yourself resident and ordinarily resident in India, your international revenue is taxable in India. You might be additionally required to report any international belongings and revenue earned from them in your tax return.
An NRI or RNOR has to pay tax on revenue that accrues or arises in India or revenue that’s obtained in India.
Please test your standing for the FY in query. In case you are resident in India, it’s a must to report and pay tax in your international revenue. On this case, you could possibly take advantage of the double tax avoidance settlement to make sure the identical revenue just isn’t doubly taxed.
Archit Gupta is founder and chief govt officer, ClearTax. Queries and views at [email protected]
