Residential Status – NRI or Resident? & NRI Taxation

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• Hello Shreekanth,
  I have 2 queries.
  1. What happens to an NRE Account once the NRI returns to India for good? I am told that the NRI status is valid for a period of 7 years and funds in the NE Acc are non taxable for that period. Can you confirm?

  2. What about investments such as metal funds & shares that were invested through the NRE Acc? Is there capital gains tax on these after I have returned to india for good?

  Thanks.

  Look forward to hearing from you.
  Regards
  John

  • Dear John,
    NRI benefits are available to an individual till the time he/she holds the NRI as residential status. A person loses his NRI status in the same year when he returns to India or within 2-3 years from the date of arrival to India, depending on the number of days of stay in India (explained in the article).
    Immediately on return to India, NRIs should inform their bank to designate their accounts as domestic Resident accounts or transfer the balance in their NRE/FCNR accounts to Resident Foreign Currency (RFC) accounts, if so desired; FCNR accounts can be continued till the date of maturity and upon maturity, can be converted to RFC accounts.
    NRI status is not valid for 7 years but one can re-invest or repatriate the balances or amounts or assets in abroad to india over the next 7 years (This exemption period is limited to 7 successive years which immediately follow the year in which the NRI permanently returns to India.)

    Suggest you to consult a CA or NRI taxation expert.

• Hi Sreekanth,
  Could you please let me know what is the Previous Financial Year I should consider in the calculator?
  "No of days you were in India in the Previous Financial Year" = 2015-2016 or 2014-2015
  I'm Out of India from Oct 2014 till now, So I need to understand what exactly will be the Previous Financial Year.

  • Dear Bhagyashree ..It is 2015-16.

• Hi,
  I started working from 2010 and was in India from 2010 to April 2013.
  I got a job in West Africa in May 2013 and use to work on a roster. 6 weeks in Africa followed by 2 weeks in India.
  I sometimes did more than 6 weeks, so my total stay in India was never more than 182 days.
  So basically 2013 - 2014, it was around 100 days in India, 2014 - 2015 again the same.
  I lost the job exactly in March 31 2015 and have been unemployed since.
  How will be my taxation structure ?
  I received my salary in NRE account and no income arised in India.
  The whole money in my NRE and NRO is a result of income from my job in West Africa.

  I am quite confused, can you help me please ?

  • Dear Rahul ..Your income earned in W.Africa will not be charged to tax if your residential status is NRI.
    (Assuming you do not have any source of income here in India).

• Hi
  I am workinhg outside india in merchant navy and staying outside more than 185 days my salary is not taxable?which itr form i need to fill up?

  • Dear Rohit ..It depends on source(s) of income . Kindly read: Which ITR form to file?

• I visited Oman on 27 September 2015 for job and working till date
  Meanwhile I visited India for 20 days to meet my family. So my stay in india is 180 (1 April-27 September) +20 =200 days
  So what will be my status? Should I have to pay taxes on my income earned in Oman?

  • Dear Ganesh,
    Your Residential status for FY 2015-16 is Resident Indian.
    So, income earned in India or abroad is liable for taxes.
    However, if you have already paid taxes in Oman on 'abroad income', and if oman has DTAA (Double taxation avoidance agreement) with India then there is no need to pay taxes (abroad income) in India again.
    Suggest you to take help of a CA.

• Hi Sreekanth,

  I am a merchant navy officer (NRI) and is working in foreign going ships from 2011. I have not met my NRI days of 180 days abroad criteria for the year 2014 alone. Could you pls advise if i should pay my taxes for the year 2014? & pls advise if i should be filing my taxes?Kindly Advise

  • Dear NEERAJ,
    If you were Resident Indian for FY 2014-15, then suggest you to file ITR (if there was taxable income).
    Kindly note that you can not claim Refund (if any) now.

• Hello Srikanth,

  I moved to US on a L2- Dependent Visa on July 15, 2015. What will be my residential status in India for FY 2015-2016? Also, I started working in US (for a US based company) since Feb 29, 2016 and I am paying tax in US. Should I pay tax in India for the salary earned in US from Feb 29-Mar 31, 2016?

  • Dear Ramya..Kindly use the calculator provided in the above article and find out the Residential status.
    If you are an NRI, then no need to pay taxes on foreign income.

• Hi,

  If someone has moved from India to Dubai (to join a Dubai based firm) in Nov 2015, what happens to his income that he earns in Dubai from Nov to Mar? Will it be taxed in India for FY15-16? Won't DTAA come into play in this?

  Thanks

  • Dear ST..DTAA comes into picture. The foreign income will not be taxed. But kindly read the points given in the above article.

    • Thanks.. I read the above.. But I am not clear on one thing.. The stay qualifies as Indian Resident.. So the last 4 months of the year, Dec to Mar, foreign income will not be taxed in India owing to DTAA right?

      • Dear ST..If residential status is RI, he/she is liable to pay taxes on foreign income too. But if one has already paid taxes in foreign country then he/she has to submit documentary evidence of such tax payments to AO.
        So if any tax paid in Dubai on income earned will be exempt in India depending upon the DTAA agreement

• Hi, If a person went USA on work visa on perment basis(i.e.salary also receiving from USA payroll) from march 2015 but again he came to india and stayed in india around 90 days in between june 2015 to dec 2015 in purpose of USA company assignment to india company but not recieved any income from india company and also not recieved any allowance, in this case for FY 2015-2016(assessment year 2016-17) will he be treated as NRI?

  • Dear Anu..Suggest you to kindly use the provided calculator to check the Residential status.

• Hi Sreekanth,

  What is the exact difference between ROR (Resident and Ordinary Resident) and RNOR(Resident non ordinary Resident).

  Thanks in advance.

  • Dear Mahesh,
    Resident and Ordinary Resident (ROR) means a person who was either in India during the whole of the Financial Year or for a period not less than 182 days, where as if any resident who was not a resident and ordinary resident in 9 out of the 10 previous years he becomes Resident but RNOR.
    For more details ..kindly read this article, click here..