You went for a short trip to US and returned with US Dollars, or you stayed in US for a long time and sent US Dollars to your family as remittance. Are you liable for income tax in India? Answer depends upon your residential status in India.
Resident Indian (RI), Resident but not Ordinarily Resident (RNOR), Non Resident Indian (NRI)
According to Income Tax Act 1967, you are Resident Indian, Resident but Not Ordinarily Resident or Non-Resident Indian for any year depending upon the following conditions:
Resident Indian (RI)
- If you have been in India for that financial year for 182 days or more, or
- If you have been in India for 60 days or more in that financial year and 365 days or more in the 4 year preceding the subject year and stay in India for at least 60 days (182 days instead of 60 days for a Person of Indian Origin)
Resident but Not Ordinarily Resident (RNOR)
- If you have been not been Resident Indian for 9 out of 10 years preceding the subject year
- If you have been in India for 729 days or less in last 7 years preceding the subject year
Non Resident Indian (NRI)
- If you do not qualify to be a Resident Indian and Resident but not ordinarily resident
- If you are an Indian citizen or Person of India Origin
Taxability
You will be liable for income tax on income as per the following conditions. India has Double Taxation Avoidance Agreement (DTAA) with over 80 countries. If you have already paid tax in foreign country then you may get credit for the tax paid abroad under Section 90 or Section 91 under Income Tax Act 1967 depending upon whether India has a DTAA with that country (Section 90) or not (Section 91).
Resident Indian (RI)
If you are Resident Indian then you are liable for income tax on your global income.
Resident but Not Ordinarily Resident (RNOR)
If you are Resident but Not Ordinarily Resident (RNOR) then you are liable for income tax on
- Income received or deemed to be received in India.
- Income accrued or deemed to be accrued in India
- Income accrued or arises outside India from a business controlled in a professional setup in India
Non Resident Indian (NRI)
If you are Non Resident Indian then you are liable for income tax on
- Income received or deemed to be received in India.
- Income accrued or deemed to be accrued in India
Remittance to India
Remittance sent to India will be treated as one’s income if it is sent to one’s own account or to lineal ascendants (parents) or descendants (spouse, children). Tax liability for one’s income will be calculated as above.
If remittance is sent to someone else without consideration then that remittance will be considered gift and may incur gift tax.
