Residential Status – NRI or Resident? & NRI Taxation

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• Hi Sreekanth,
  I am in UAE for Employment for last 3.8 years since April 2013, and coming back permanently after cancelling my Visa in Dec 2016. In current FY, my stay in India would be 105 days. As per your flowchart, my resident status will be NRI. Right ?

  Thanks
  Deepak

  • Dear Deepak,
    If you satisfy both these conditions;
    Stayed in India for 60 days or more in PY (AND)
    365 days in the 4 years preceding PY..
    Then yes, your residential status would be NRI.

• How many NRIs visit India in December and January numbers or percentage. eg 15 lakhs or 30% of the total NRI come in a year.

• Hi Sreekanth,
  I am in Australia from 2-july-2016(Travel from india) to 31 Dec-2016( Leaving Australia) (No of days= 182).
  Could you please let me know should I need to pay tax in India as well or should I stay in Australia for next 4 days (4-01-2017) (No of days=186)
  So , I can save my tax.

  Please advise me on the same.

  • Dear Ajit,
    If you stay out of India for more than 182 days then you need to meet the other two conditions as well.

    Stayed in India for 60 days or more in PY (AND)
    365 days in the 4 years preceding PY

    Kindly check this in the Flowchart. Even if your Residential Status is NRI, any income from sources in India, can be subject to taxes (for ex- rental income in India).

• Hi, If I join a company in Dubai in December 2016, will I be adding my salary earned there and deposited directly to my Dubai account to my salary earned in India from March 2016-November 2016 for determining income tax? UAE income is tax free, but cost of living is high. Is there any provision of deducting the cost of living from India taxation?

  • Dear Arjun,
    If your Residential status is Resident Indian for FY 2016-17, then you have to club both the incomes and pay taxes (if any).

• My husband in working abroad since jan 2016.He visted India from 8th july 2016 to 10th September 2016...he will bw visiting again for 14 days in jan 2017.Is his status NRI...also he transfered dollars in my account just the day our prime minister declared about our 500 n 1000 rupees ban...also he has transfered amount more than 2.5 lakhs...is all this amount taxable to me....he is a joint account holder with me.Do we need to fill his income tax returns..please advice.

  • Dear Tujender,
    Kindly use the calculator available in the above article to check the Residential status.
    You may consider the transferred amount as Gift.
    Read: Gifts & Tax implications.
    Have you been filing Income Tax return?
    Whether you husband has to file returns or not? - It depends on the residential status, income earned in India etc.,

• Hi Sreekanth, I am working in London from Apr 2014 onwards and have NRI status for last 2 FY and did not pay any IT in India. I stayed in India for about 35 days in last FY (2025-16). I am planning to come back for good to India in Dec 2016. Can you pls clarify if i do not need to pay tax for salary earned from Apr '16 - Dec '16 in India. My understanding is that I will have to pay tax only for the salary i will earn in India from Jan '17 - Mar '17. Pls confirm

  rgds, Ananth

  • Dear Ananth,
    It depends on whether your Residential status would be RI or NRI for this FY 2016-17.
    If you are NRI for this FY, yes your understanding is correct.

    • Hi

      That is what I want to find out and get confirmation.. My current status is NRI as I am getting paid in UK atleast until Dec. If I return back to India in Jan, would I still be considered NRI for this FY and pay income tax only for the income from Jan to March 2017

      • Dear Ananth..Kindly use the calculator to determine your Residential Status.

• Dear Sreekanth , i have the following queries about my income tax filing in India for AY 15-16

  I worked in overseas from Jun 2003 to May 2014 for Overseas based company as a permanent resident there . and returned to INDIA and started working from Sep 2014 from different firm in India.

  Can you clarify the following?

  1. As per calculator I am not an ordinary resident, NOR. Is it correct?
  2. I worked in Overseas Apr and May 2014 and did not pay tax as I did not stay more than 182 days at their country for assessment year ,As peer NOR status ,do I need to pay income tax in India for the same ?.There is no link between India and the firm where I worked in Overseas,
  3. I have closed my overseas PF account and settled the same to overseas bank account and transferred the same fund to my NRE account by me ,is this settlement is taxable for NOR ?
  4. I have sold my overseas property in overseas and the same settled to my overseas bank account, Is this taxable for NOR (not an ordinary resident) .
  5. I have created few NRE deposit which is maturing in 2017,, interest on NRE deposit is taxable for NOR ?,if not then how long tax free ?
  Thanks

  • As per the Income tax Act, 1961: Indian residency status is defined as per the below given criteria.
    a. Person is in India for 182 days or more during the current financial year. OR
    b. Person is in India for 60 days or more in the current financial year and for 365 days or more in the preceding four financial years If the person departs from India on a long-term assignment, then the residency status is as per point (a).
    If the person returns to the India, then the residency status is as per point (a) or (b) whichever condition is satisfied.
    -Sridev Bhavanandam

  • Dear Sellappaen,
    1 - Yes. This is essentially a transitional status between being an NRI and becoming a full-fledged Resident. An NRI, in nine out of the ten previous years preceding that year, (or) He/she has, during the seven previous years preceding that year, been in India for a period of 729 days or less is considered as RNOR.
    2 - I believe that Income received and accrued outside India from a business controlled or set up in India is taxable in India, even for an RNOR. It is not controlled, then not taxable.
    3 - I believe it is not taxable. Kindly note that the RNOR is a special status accorded in order to provide some benefits to returning NRIs.For Indian income tax purposes, an RNOR is treated at par with NRIs.
    4 - Not taxable.
    5 - Did you convert the accounts into Resident account or Resident Foreign Currency (RFC) account?
    Kindly note that I am not a tax expert and hence advisable to consult a CA related to these matters.

• I am resident canadian and filling taxes in canada ; further since my stay in India is more than 183 days , f my income from abroad will be taxed in india . As per DTAA rental income and pension income in canada can be taxed in Canada only . Please clarify.

  Thanks

  • Dear RAKESH ..I do not have the required knowledge specific to Canada - India DTAA agreement.
    Kindly consult a NRI tax expert.

• Dear Mr Sreekanth,

  I would really appreciate a reply to this if you would.

  My husband and I are Indians living in London since July 2012. I am employed full time while my husband is employed on and off. We have traveled to India frequently in the last few years.

  I have recently been laid off and have to return to India in a few months with my husband. In this financial year I was employed from April 1 – August 16. My husband will be employed from August 17-October 20. We intend to return to India on November 20.

  I have spent 13 days in India in FY 2016-17. My husband has spent 33 days in FY 2016-17.

  Will we have to pay taxes on our UK income in India in FY 2016-17 on our return?

  Please do reply.

  • Dear Natasha,
    Suggest you to kindly first check your Residential Status using the above calculator.
    If your status is NRI for FY 2016-17, then there is no need to file taxes for your foreign income in India for FY 2016-17 (AY 2017-18).
    If your status is RI then, you have to pay taxes in India, but if you have paid certain taxes on foreign income in UK then you may have to pay only differential tax rate in India (if UK & India are part of double taxation avoidance agreement).
    Suggest you to consult an NRI taxation expert.

• Hi
  Suppose I return to India in June and am then a Indian resident (no longer NRI), will my income abroad (salary earned in the months April to June of that year) be taxable in India ? Do I have to declare it in my return ?
  Thanks

  • Dear Ashok,
    For Resident indian, income from abroad sources is taxable, but if you have already paid taxes in the foreign country and if India has double taxation avoidance agreement (DTAA) with that country, then you need to pay only the differential tax rate on such income here in India.