I have been working in America for the last six years. I came to India in May for personal reasons. I continue to work for a US company (on US projects) away from India. I keep getting salary in dollars in my US account. I’m not sure when (or at all) I’ll go back to the US. My understanding is that from December onwards, I will qualify as RNOR and file returns in India. Will my US salary be considered income from India, and will I have to pay tax in India on this salary?
—Name withheld on request
To find out whether your income will be taxed in India or not, you need to establish your residential status as per IT Act of India for the relevant financial year(s). Note that this position may change from year to year and hence needs to be determined for every financial year. You can check your residential status in the following way.
Conditions: a) you are in India for 182 days or more in a financial year; or b) you are in India for 60 days or more in a financial year and for 365 days or more in the four financial years immediately preceding the relevant financial year. Additional Conditions: You are a resident of India in two of the 10 financial years immediately preceding the relevant financial year; and you are in India for 729 days or more in the seven years immediately preceding the relevant financial year.
If you satisfy either of the first set of conditions and both the additional conditions, you will be deemed to be resident in India. If you meet one of the first conditions, but do not satisfy the additional conditions, you will be deemed to be a resident but not ordinarily resident in India (RNOR). If you do not fulfill any of the first conditions, you will be a non-resident in India. Unless you are a non-resident or RNOR in India, income earned and received by you outside India will not be subject to tax in India.I am one
I am an NRI residing in UAE for more than 10 years. I transfer my savings to an NRI account in India. Every month, I transfer a certain amount to a joint account with my wife. My wife has no income of her own. Will any income tax be levied on this savings account?
—Name withheld on request
Money gifted to your wife will not be subject to tax in India as she is a specified relative as per the IT Act. The money received by him will not be taxable in your hands. If she invests this money and it generates income, there could be tax implications for you.
Archit Gupta is the founder and CEO of Cleartax.
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