Basic Indian Taxes for NRIs
Residential Status and types of Non - Residents
Residential status helps a person know and determine his tax liability. It is a key factor when you come to India to determine your tax status and file returns to avoid further consequences.
Know your residential status before you can file your taxes.
Residential Status- Under IT Act and FEMA(Foreign Exchange Management Act)
Under IT Act
The below points need to be checked while considering the residential status of an Individual:
- He stays in India for at least 182 days during the previous year.
- He stays in India for at least 60 days during the previous year and for at least 365 days during 4 year preceding the previous year.
- He stays in India at least in 2 out of 10 years preceding the previous year.
- He stays in India for at least 730 days during 7 years preceding the previous year.
A person would be resident in India if he satisfies any of the conditions at (a) or (b) and both the conditions at (c) and (d) i.e. he either satisfies conditions (a), (c) and (d) or (b), (c) and (d).
A person would be resident but not ordinarily resident if he satisfies either of the conditions at (a) or (b) and does not satisfy both or either of the conditions at (c) and (d). In other words, if a person satisfies condition (a) or (b) only but does not satisfy either (c) or (d) or both, he would be treated as resident but not ordinarily resident in India.
If a person satisfies neither of the conditions (a) or (b), he is a non-resident.
Relevance of residential status as per FEMA.
Person resident in India - You need to consider two tests to know whether you are a resident or not under FEMA
A person residing in India for more than 182 days during the course of the preceding financial year But does not include
- A person who has gone out of India or who stays outside India, in either case
- For or on taking up employment outside India or
- For carrying on outside India a business or vocation outside India or
- For any other purposes, in such circumstances as would indicate his intention to stay outside India for an uncertain period
- A person who has come to or stays in India, in either case, otherwise than
- For or on taking up employment in India or
- For carrying on in India a business or vocation in India or
- For any other purpose in such circumstances as would indicate his intention to stay in India for an uncertain period.
Types of Non Residents
||PIO(Person of Indian Origin) card holder
|An Indian Citizen who is residing outside India and holds an Indian Passport
||A person who or who's any ancestor was an Indian national and who is presently holding another country's citizenship or nationality.
|An NRI is entitles to all benefits available to an Indian Citizen subject to notifications issued by the government from time to time.
- Shall not require a separate visa to visit India.
- Will be exempt from the requirements of registration if his/her stay on any single visit in India does not exceed 180 days.
- Parity with NRIs in respect of all facilities available to the later in the economic, financial and educational fields except in matters relating to the acquisition of agricultural/plantation properties. No parity shall be allowed in the sphere of political rights.
||Can visit India without visa for 15 years from the date of issue of PIO Card; but if the person is a PIO and does not have a PIO Card, then visa is needed depending on purpose of visit.
PIO's and OCI's are merged