How will my income be taxed if I move to the UK?

—Name withheld on request

The taxability of an income in India depends on the residential status in India, the source of income and the place of receipt of income. Residential status in India is determined on the basis of physical presence in India in the current financial year (FY) and last 10 financial years. The housing situation is dynamic and requires fresh assessments every financial year. Assuming that you qualify as a “resident and ordinarily resident” in India, you are liable to tax on worldwide income in India and you are required to report all foreign income and assets in India’s income tax return. the wanted.

Accordingly, total salary income including salary earned and received in the US will be taxable in India. You can claim foreign tax credit in India against India payable on double tax income for taxes paid in the US under Article 25(2) of the Double Taxation Avoidance Agreement (DTAA) between India and the US. To claim the foreign tax credit, you must also file Form 67 electronically before the original due date for filing the income tax return. Form 67 should be supported by a certificate/statement specifying the nature of income and the amount deducted or paid in the US.

I am working with a multinational company in India and I have been asked to move to UK for three years. How will my income be taxed? Will I qualify as a NRI?

-Ankit

Taxability in India depends on the residential status in India, the source of income and the place of receipt of income. Residential status is determined on the basis of physical presence of an individual in India during a financial year (i.e., from 1st April to 31st March) (including working days and non-working days) and last 10 financial years. For Indian citizens, even if they do not become “resident” on the basis of physical presence in India, they are “resident but ordinarily resident” on the basis of absence of liability to pay tax in any other country or territory No” (RNOR). domicile or residence or any other criterion of similar nature, if the source income of India exceeds 1.5 million. The housing situation is dynamic and requires fresh assessment for each financial year.

In your case, during the fiscal year of leaving India for employment in the UK and during the financial year of employment in the UK, you may qualify as a “non-resident” (NR) of India, if you are an Indian citizen ; and your physical presence in India is less than 182 days during the relevant financial year. During the financial year of permanently returning to India, you may qualify as an “NR” of India if your physical presence in India is less than 60 days during the relevant financial year or your physical presence in India for the relevant 60 days or more during the financial year but less than 365 days in the last four financial years.

But, being an Indian citizen, even if you are an “NR” as per the above criteria, you can still become an “RNOR” if you pay tax in any other country or territory due to domicile or residency or any other reason are not liable to. Norms of similar nature and exceeds the source income of India 1.5 million.

If you qualify as “ROR” of India during the relevant financial year, then salary income received and earned in the UK will be taxable in India. You can claim foreign tax credit in India against income tax payable on income doubled for taxes paid in India. UK under the Double Taxation Avoidance Agreement (DTAA) between India and the UK. To claim the foreign tax credit, you must also file Form 67 electronically before the original due date for filing the income tax return. Form 67 needs to be supported by a certificate/statement specifying the nature of income and the amount of tax deducted or paid in the UK. If you qualify as an “NR or “RNOR” of India during the relevant financial year, then salary income received and earned in the UK will not be taxable in India.

Sonu Iyer is the Tax Partner at EY India.