How can you determine your residential status?
A person is considered as an Indian Resident for a financial year under following conditions: -
• When a taxpayer is in India for at least 6 months, that is 182 days for the relevant Financial Year.
• In a situation where a taxpayer has stayed in India for 2 months last year and has stayed in India for about 4 months for the relevant financial year.
If you are an Indian citizen working abroad or a member of a crew on an Indian ship, only the first condition is applicable to you, that means you are a resident Indian only when you stay in India for at least 182 days in India.
What if a taxpayer earns income in Abroad?
An NRI’s income status depends on his residential status for the relevant year. If your status is ‘resident,’ then in that case your global income is taxable in India. If your status is ‘NRI,’ your income which is earned or accrued in India is taxable in India.
The Salary received by taxpayer in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI in India. Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is also considered tax-free in India. Interest on NRO account is taxable for an NRI in India.
When an NRI is supposed to file ITR in India?
Irrespective of their residential status, anyone who has income of more than 2.5lakh in a financial year is supposed to file ITR in India.
Mostly NRI’s file ITR in the following situations: -
• When a taxpayer wants to claim a refund.
• Have a loss that they want to carry forward.