How are you Taxed in India when you Travel Abroad
Resident Individual on a temporary foreign assignment
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.
Resident Individual recently moved abroad
NRI or not, every individual must file tax return if their income exceeds Rs. 2,50,000. But note that NRIs are only taxed for income earned/collected in India. So, Rahul will pay taxes on income earned while in India, and income accrued from FDs and savings account.
| Prashant’s income from India | |
| Income from Indian employer | Rs. 3,00,000 |
| Interest income from FDs | Rs. 25,000 |
| Bank account savings interest | Rs. 4,500 |
| Gross total income | Rs. 3,29,500 |
| Deductions | |
| Section 80C – PPF investments | Rs 20,000 |
| Section 80TTA exemption | Rs.4,500 |
| Taxable income | Rs. 3,05,000 |
| Tax slab at 10% | Rs. 5,500 |
| Cess at 3% | Rs.165 |
| TDS deducted by employer | Rs. 4,000 |
| TDS deducted by bank | Rs. 4,500 |
| Tax Refund | Rs. 2835 |
Living in a foreign country
| Rental income | Rs 4,20,000 |
| Less: Standard 30% deduction under Section 24 | Rs.1,26,000 |
| Income from House Property | Rs 2,94,000 |
| Income from FDs and bank account | Rs 30,000 |
| Gross total income | Rs 3,24,000 |
| Deduction under Section 80D | Rs.20,000 |
| Taxable income | Rs.3,04,000 |
1 Arjun’s gift to his father and money transfer of Rs. 10,000 to his mother are exempt from tax. Regarding the insurance expenses on his parents, Rahul can claim a deduction under section 80D of Rs 20,000, since his father is over 65 years of age.
He will be required to file tax return in India as his gross income exceeds Rs. 2,50,000.
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.
Resident with global income
If you are a Resident Indian your global income is taxable in India.This income may have been earned or received outside – but it shall be taxed in India. In case this income is also taxable in another country, you can take benefit of DTAA (Double Tax Avoidance Agreement).
