Nri taxation

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Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2017 Dear Sir,

What will be my tax liability, if I am treated 'Resident' as per Income tax but remain 'Non Resident' under FEMA

As I am employed overseas but i travel a lot and this year I stayed in India for more than 182 days, so based on below mentioned figure, how my Income going to be taxed :-

Salary Income in Overseas 600,000/Yearly
NRE FD Interest 300,000/Yearly

*I am resident in U.A.E., so as per INDIA/UAE DTAA treaty, concessional tax rate is fixed at 12.5% in India.
*I heard that Interest on NRE fixed deposit will remain tax free, under IT act section 10(4)ii being my status as NRI under FEMA, untill I return India permanently.
*I don't fall in category of RNOR

Please guide me as soon as possible.

Regards
Pk

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 January 2017 NRE FD interest is exempted. Salary earned out side India is taxable in India.

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2017 Sir,

Thank your very much for your quick reply.If so thatn I will have to declare my salary here in India, but how it gonna be taxed ?...

As per tax slab rates in India OR I get some benefit.

Though there is no taxes in UAE but if I were living in a country, where I had to pay tax on my Salary too than how it will be taxed in India.

Do I have to pay tax in both countries ? Its not justified logically.

So how to fill right tax return for my salary income in UAE, which is INR600,000/yearly.

Can you please explain it.

Thanking you

Prakash

CA R SEETHARAMAN

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15 January 2017 1 As per slab rates in India tax payable.
2 Any tax paid in foreign country can be deducted (relief can be claimed) while paying Indian taxes.
3 No double taxation.
4 File ITR 1 under the salary head,

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2017 Hello Sir,
Please note for my same inquiry, I got reply from another C.A. and he replied that even if I stay more than 182 days in India but if I am employed overseas (*UAE) than and being my status of "NRI" as per FEMA : -

*As u said NRE FD INTEREST will not be taxed but SALARY will be taxed, but he said both will not be tax, as under :-

A) My Interest income on NRE FD is exempt from tax under 10(4)ii
B) My Salary, which I get in Dubai will not be taxed, under article 15 of DTAA agreement between INDIA/UAE,
if I am giving my services in Dubai and getting my salary in my overseas account, the reason for staying more
than 182 days in India is only of LONG TERM vacation to take care of my mother and I have certain intention
to go back to my work in UAE.

Please reconfirm if all above is true..so it means, i will not have to fill my return at all.

Hoping to hear you soon.

Regards
Prakash

CA R SEETHARAMAN

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22 January 2017 Under FEMA also you are resident. Your salary will be taxable in India.

Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2017 Sir,

You said I will be Resident under FEMA but sorry to say its not true.

If I m Resident under FEMA than I m not allowed to hold NRE account at all.

As I read NRI under FEMA...I am always NRI if I m employed overseas and getting my salary overaseas, even if I m staying more than 182 days in India. I have certain intention to go back overseas and If I m not employed in India...so under FEMA I m definately PERSON RESIDENT OUTSIDE as I m gone out for employment and DAYS CONDITION doesn't apply on me.

So staying more than 182days makes me RESIDENT under IT ACT but I remain NRI under Fema till I m employed overseas.

This is why I m allowed to keep my NRE account and I get 2 benefits

1. My overseas salary is exempt under DTAA article 15 of INDIA/UAE
2.My NRI fd interest is tax free as I m "Resident outside India" as per FEMA.

Please read my situation carefully and gv me your kind advise.

CA R SEETHARAMAN

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22 January 2017 Read DTAA provision 15 (2) (a) referred above.

Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2017 Sir,

Noted........

But its not changing my status of "PERSON RESIDENT OUTSIDE" under FEMA.
*FEMA is totally different than DTAA

If DTAA was not applied than my salary would have been taxable, but as DTAA applied its taxable
only if my employment is exercised in INDIA and I stay here more than 183 days for my employment purpose.

Sir, I am not staying in INDIA for employment purpose but I am spending more time her for my personal family
reasons w/out any employment or intention to settle here.

Am I wrong to understand this interpretation? As some other CA told me that its not taxable because I am not staying in India for employment for my overseas employer. So only DTAA article 15 (1) will be applicable in my case.

Article 15 (2) a will only be applicable, If I am working for my overseas employer in India and staying here for more than 183 days for his work.

Do you mind if we talk on phone once, as this matter is really important for me and I don't want to fall in any problem later.

Regards
Prakash 9six3six8six0three4three

Querist : Anonymous

Querist : Anonymous (Querist)

24 January 2017 Sir

I found some more details related to `DTAA15(1) clause.........please read below mentioned link and give me your final conclusion, if my salary will be taxed or not. I think it will not be taxed.......as per details of this attached link.

https://www.cagds.in/articles___presentations/articles/foreign_salary___taxability_from_resident_s_perspective_

regards
Prakash

CA R SEETHARAMAN

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24 January 2017 As per DTAA your salary income is liable to be taxed in UAE. You can argue the case in your favour. Good article.

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2017 Dear Sir,

Thanks and I found, if DTAA applies in my case, even if I don't have any person income tax in UAE
than tax will be applicable only as per Article 15(1) i.e. source country will tax it.

15(2) gives tax rights to Residence country (India) if all 3 conditions are satisfied altogether but in my case
though 15(2) a is satisfied but 15(2)b is not satisfied. So only 15(1) will be applicable, which gives Source
country to tax on my Salary Income in their country.

The only problem I see in my case is, can DTAA be applied or not due to no personal income tax.
IT dept can raise issue that DTAA can't be applied in my case.

*So please do reply, if DTAA is applicable or not, if there is no personal salary tax in UAE.

Am I right with my conclusion ? Please give me your opinion, so it can help many other NRI's working in UAE but sometimes spend more than 6 month in India in a financial year for personal reason.

Regards
Prakash C

CA R SEETHARAMAN

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12 February 2017 If you are a non resident for the past 10 years then such foreign income will not be taxed in India treating you as Resident but not ordinary resident. If you not satisfy this condition then your foreign income is taxable in India being resident during the year,

Querist : Anonymous

Querist : Anonymous (Querist)

12 February 2017 Sir,

You are again confused with residential status, let me ask you in simple way :-

Suppose

If I am just ORDINARY RESIDENT only and if we go UAE and work for 3-4 month and get salary in Dubai for my work performed in Dubai with their resident employer.

I know my global income will be taxable in India but I want to know, if there is no personal income tax in Dubai than :-

A) Will DTAA be applicable on getting tax relief on my Dubai salary income?
*This is most important question, if there is no personal income tax in Dubai, will DTAA be in force or applicable
for getting tax relief?

B) If it is applicable than DTAA article 15(1)(2) will be applied to see for such tax relief.
Article 15(1) says that Source country have right to tax, if work is peformed there, carved in
Article 15(2) having 3 conditions, which all to be satisfied together, so that the Residence country can tax
on such Income but its condition no. (b) is not satisfied, as my employer is resident of Dubai.

If so than Article 15(1) only be applicable and it says Source country will tax on such income.

Does it mean Residence country (INDIA) have no right to tax on such income, as this is what article 15(1)(2)
says.

Please comment.

Regards
Prakash

CA R SEETHARAMAN

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13 February 2017 A) As no tax is paid in Dubai no relief can be claimed as per DTAA provisions.
B) Relief available only if tax is paid.
Your global income is taxable in India being resident(overrides the provisions of DTAA and allows relief), DTAA talks about where your income is taxable. In case your global income is taxable in foreign country you can claim relief only of the tax paid out side India.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2017 Dear sir

Noted but please note that my Dubai Salary Income is subject to tax in Dubai and Dubai government keeps right to tax it but its their own will they keep tax rate to be "0" only, so it doesn't mean its not taxable or I am not liable to pay tax there if i am asked for, therefore it doesn't give tax right to "residence country" that if source country is not taxing the person/such income.

So if this income is subject to tax by Dubai government and they keep sovereign right to tax than DTAA should be applicable.

If so DTAA is applicable, than DTAA condition 15(2)(b) is not satisfied, which gives tax right to 'residence country', so it is only source country, who keep tax right, whether their tax rate is "0".

Am I right or wrong with this conclusion.

Please give me your comment.

Regards
Prakash C

CA R SEETHARAMAN

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13 February 2017 You are absolutely right that your salary income is subject to tax in Dubai as per DTAA provisions. But being resident of India your global income is taxable in India subject to relief on any tax paid out side India.

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