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Income Tax Filing for foreign nationals

Income Tax Filing for foreign nationals

Who is an Expat or foreign national?

An expatriate in India is someone who comes to live in India and is not a citizen of India.

Are expatriates liable to pay tax in India?

Even though the expatriate is a citizen of a foreign country any income which is earned by him/her in India shall be taxable in India. This income may have been earned by working in India or by providing services in India.

An income which is earned by an expatriate in India is taxable in India irrespective of the foreign national’s citizenship or residential status.This payment may also be subjected to TDS (Tax Deducted at Source) in India.

If your total income is less than the minimum exempt income (Rs 2,50,000 for FY 2014-15) you can get a refund of this TDS by filing an Income Tax Return in India.

How is an expatriate’s income taxed when they become a Resident in India?

Taxability of income in India depends upon residential status. For a Resident entire income earned anywhere on the globe is taxable in India. This includes income that may have been earned in the country of citizenship and may also have been taxed there.

If the expatriate is a NRI or a Resident but not ordinarily resident (RNOR) only the income which is earned in India is taxable in India. Therefore, the first step is to find out the residential status. As per the residential status rules of the Indian Income Tax Act, for the first 2 years after your arrival in India you will enjoy RNOR status and will pay tax only on the income which is earned by you in India.

Can foreign national take benefit of DTAA?

Double Tax Avoidance Agreement or DTAA is an agreement between two countries to help avoid taxation of an income in both the countries. If income of an expatriate is taxable in India as well as another country, the expatriate can take the benefit of DTAA and avoid paying double tax on such income. If you have earned an income which is taxable in a foreign country and has to be offered to tax in India as well our CAs can help you take benefit of DTAA.

Income Tax Filing for foreign nationals

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