I’ve been a US citizen for the previous 17 years. I moved again to India in July 2022. But I’m nonetheless working for a US agency and getting wage within the US account. Do I have to file taxes in India for the wage earned earlier than August or solely after August? Also, how can I profit from DTAA?
—Name withheld on request
There are three kinds of residential standing in India: Resident and Ordinarily Resident (ROR), Resident however Not Ordinarily Resident (RNOR) and Non Resident (NR)
Residential standing in India is decided primarily based on whole bodily presence in India within the present monetary 12 months (FY) and previous 10 FYs as additionally quantum of India sourced revenue within the present FY. Residential standing wants contemporary willpower in every FY.
An particular person qualifying as ROR is taxable on worldwide revenue in India and is required to report international incomes and property held exterior India within the tax return. An particular person qualifying as a ‘NR’ or ‘RNOR’ is just not liable to tax in India on his international incomes (until acquired in India).
As you’re a US citizen and moved again to India in July, you might qualify as RNOR of India for FY 2022-23 in case your presence in India is 729 days or much less in the course of the interval 1 April 2015 to 31 March 2022 or you qualify as NR of India in 9 out of 10 previous FYs. As an RNOR, you’re taxable on following incomes in India:
-Income acquired or deemed to be acquired in India;
-Income that accrues or arises in India;
-Income deemed to accrue or come up in India;
-Income accruing or arising exterior India from enterprise or occupation arrange in India
Salary revenue for providers rendered in India is taken into account as ‘deemed to accrue or arise in India’. Thus, wage earned by you whereas working in India from August shall be taxable in India even whether it is paid within the US account. As an RNOR, wage earned within the US until July 2022 won’t be taxable in India. As the wage is acquired within the US, it might be taxable within the US additionally. In such case, you might declare acceptable profit (both exemption or international tax credit score) underneath the Double Taxation Avoidance Agreement (DTAA) between India and the US in that nation to keep away from double taxation.
Sonu Iyer is tax companion and folks advisory providers chief, EY India.
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