Understanding Your Tax Status

India counts the days a person resides here during a financial year (April to March) in order to decide if the income is taxable.

– If you are considered a resident, then all your global income, including income derived outside of India, will be taxed in India.

– If you are classified as non-resident, then only what you earn or receive in India is taxable. For example, generally, income from outside India will not be taxed.

For example, if you arrive in December, but your aggregate stay during that fiscal year is less than 182 days, you might still be considered a non-resident. In this case, income earned abroad before moving back would typically not be taxed in India.

Keys to Remember For The Last Time:

– Enumerate the days of visit to India in every financial year.

– Understand if the foreign income was indeed earned and, if so, whether it was remitted too in India.

– Despite being back in your resident country, file your Income Tax Return, for which the exact residential status should be mentioned.

– One thing to be wary about is that if only a part of the year changes from non-resident to a resident, the income must be bifurcated accordingly.

– Always have a tax advisor counselling anytime for paying due taxes without wrong reports, avoiding penalties.

These are all the implications of this rule in favor of returning NRIs afraid of dual taxation, biased against them. Proper planning of income earned before returning will keep the threshold position of Indian tax laws compliant.

At Abhinav Immigration Services, we provide assistance to returning NRIs to enable them to come to grips with the tax laws, draft their transitional arrangements, and know where to begin.

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