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How are you taxed when you are a


How are you taxed when you are a

Rahul worked out of Singapore on a temporary assignment of 4 months and earned in Singaporean Dollars during that time. He got this income credited to a bank account here in India. He has returned back home now. How should he file his income tax return?

Rahul’s taxes for this year will depend on his residential status. Since Rahul has not been outside of India for more than 182 days, he will be considered a resident.

He will be required to file his income taxes in India this year. This will also include his salary earned during the foreign assignment in Singapore.

If the assignment extends to more than 182 days, Rahul’s residential status will change and he will be required to pay taxes only on the Indian income earned thus far. Here note that, Rahul’s foreign income credited to an Indian bank account is taxable in India.

NRI recently moved back to India

Returning NRIs assume RNOR status when:

    • You have been an NRI in 9 of the 10 financial years preceding the year of your return

OR

  • You have lived in India for 2 years or less (729 days or less) in the last 7 financial years

The I-T Department allows RNORs to continue to enjoy exemptions available to NRIs for a period of 2 years after their return. Therefore, deposits held in foreign currency, which are exempt for an NRI, shall be exempt to returning NRIs for 2 years.

After these 2 years, returning NRIs are treated as resident individuals.

Section V: How can NRIs avoid double taxation?

NRIs can avoid double taxation (meaning: getting taxed on the same income twice in the country of residence and India) by seeking relief from Double Tax Avoidance Agreement between the two countries.

Under DTAA, there are two methods to claim tax relief – exemption method and tax credit method.

By exemption method, NRIs are taxed in only one country and exempted in another. In tax credit method, where the income is taxed in both countries, tax relief can be claimed in the country of residence.

How are you taxed when you are a

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