Residence status for taxation
This query is : Resolved
03 February 2013
Hi,
I work with the IT company and I am presently on deputation in US.
1. In Financial year 2012-2013, I stayed in India till 25-NOV-2012 and after that I moved to US. During this time, I have income arising out of my India salary, profit from stocks and US salary (I receive part of my US salary in India). What will be the tax treatment in India?
2. In financial year 2013-2014, I will be staying in US from 01-APR-2013 to 31-DEC-2013. After that I will work in India for rest of the 3 months in financial year. What is the tax treatment in India in this case?
Regards
Amol
I work with the IT company and I am presently on deputation in US.
1. In Financial year 2012-2013, I stayed in India till 25-NOV-2012 and after that I moved to US. During this time, I have income arising out of my India salary, profit from stocks and US salary (I receive part of my US salary in India). What will be the tax treatment in India?
2. In financial year 2013-2014, I will be staying in US from 01-APR-2013 to 31-DEC-2013. After that I will work in India for rest of the 3 months in financial year. What is the tax treatment in India in this case?
Regards
Amol
04 February 2013
Dear Amol
Hi
As per details, your residential status for both the financial Year is Resident in india and accordingly your Income in both the financial year will be taxable in india.
Hi
As per details, your residential status for both the financial Year is Resident in india and accordingly your Income in both the financial year will be taxable in india.
09 February 2013
Here with proper planning the status of NRI can be availed for 2013-14.
Anuj
Femaquery@gmail.com
Anuj
Femaquery@gmail.com
10 February 2013
Thanks for your replies. But I still do not understand residential status for year 2013-2014. I am going to stay in India for less than 182 days. Does not that make the residential status as NRI? Am I missing something here?
22 July 2025
The residential status for tax purposes is determined based on the number of days you stay in India during a financial year (April-March) as well as your overall stay during the preceding years. Here's how it works in your case:
Criteria for Residential Status:
Resident: You are considered a Resident in India if:
You stay in India for 182 days or more in the financial year, OR
You have stayed in India for at least 60 days in the current financial year and 365 days or more during the preceding four years.
Non-Resident (NRI): If you do not meet the above conditions, you are considered a Non-Resident.
Resident but Not Ordinarily Resident (RNOR): This is a special status that can apply if you satisfy certain conditions, such as:
You have been a resident in India in 2 out of the last 10 years, and
You have stayed in India for 730 days or less during the last 7 years.
Tax Treatment for FY 2012-13 (India + US):
You mentioned that you stayed in India until 25-Nov-2012 and then moved to the US. For the financial year 2012-13, you would need to check if your total stay in India was 182 days or more.
India Salary: Your salary earned in India will be fully taxable in India.
US Salary: As you are physically working in the US, your US salary will be subject to taxation in the US, but it could also be taxable in India.
However, India provides relief through Double Taxation Avoidance Agreement (DTAA), so you can claim a foreign tax credit for the taxes paid in the US on the salary.
Profit from Stocks: Your capital gains from stocks will be taxable based on the residential status:
If you are a Resident in India, the gains are taxable in India.
If you are an NRI, the taxation will depend on the nature of the investment (whether short-term or long-term) and where the stocks are traded.
Tax Treatment for FY 2013-14 (India + US):
In this case, you will be staying in the US from 01-Apr-2013 to 31-Dec-2013 and will work in India for the remaining three months.
If you stay in India for less than 182 days, you may qualify as an NRI for the 2013-14 financial year.
However, tax residency is calculated annually, and your period of stay in India (for the 2013-14 year) will determine your residential status.
Example:
Since you are staying in the US for more than 182 days, your stay in India will be less than 182 days.
Therefore, you would qualify as an NRI for the 2013-14 year.
If you are an NRI for FY 2013-14:
Your Indian salary for the period worked in India will be taxable in India.
US salary will generally not be taxable in India (unless you have income arising from Indian sources or any other conditions apply).
Profit from Stocks: The taxability will depend on the residential status and whether the gains are long-term or short-term, as well as where the stocks are traded.
Summary:
For FY 2012-13, you are likely a Resident for tax purposes, and your income from India and the US will both be taxable in India, but you can claim credit for taxes paid in the US.
For FY 2013-14, if you stay in India for less than 182 days, you may qualify as an NRI. As an NRI, your foreign income (US salary) will generally not be taxed in India, but income from India (e.g., Indian salary) will still be taxable.
Key Point:
In your case, if you stay less than 182 days in India for FY 2013-14, you will likely be considered an NRI, but ensure you meet the specific criteria laid out under the Income Tax Act to confirm your status. If in doubt, consulting with a tax expert is always a good idea.
Criteria for Residential Status:
Resident: You are considered a Resident in India if:
You stay in India for 182 days or more in the financial year, OR
You have stayed in India for at least 60 days in the current financial year and 365 days or more during the preceding four years.
Non-Resident (NRI): If you do not meet the above conditions, you are considered a Non-Resident.
Resident but Not Ordinarily Resident (RNOR): This is a special status that can apply if you satisfy certain conditions, such as:
You have been a resident in India in 2 out of the last 10 years, and
You have stayed in India for 730 days or less during the last 7 years.
Tax Treatment for FY 2012-13 (India + US):
You mentioned that you stayed in India until 25-Nov-2012 and then moved to the US. For the financial year 2012-13, you would need to check if your total stay in India was 182 days or more.
India Salary: Your salary earned in India will be fully taxable in India.
US Salary: As you are physically working in the US, your US salary will be subject to taxation in the US, but it could also be taxable in India.
However, India provides relief through Double Taxation Avoidance Agreement (DTAA), so you can claim a foreign tax credit for the taxes paid in the US on the salary.
Profit from Stocks: Your capital gains from stocks will be taxable based on the residential status:
If you are a Resident in India, the gains are taxable in India.
If you are an NRI, the taxation will depend on the nature of the investment (whether short-term or long-term) and where the stocks are traded.
Tax Treatment for FY 2013-14 (India + US):
In this case, you will be staying in the US from 01-Apr-2013 to 31-Dec-2013 and will work in India for the remaining three months.
If you stay in India for less than 182 days, you may qualify as an NRI for the 2013-14 financial year.
However, tax residency is calculated annually, and your period of stay in India (for the 2013-14 year) will determine your residential status.
Example:
Since you are staying in the US for more than 182 days, your stay in India will be less than 182 days.
Therefore, you would qualify as an NRI for the 2013-14 year.
If you are an NRI for FY 2013-14:
Your Indian salary for the period worked in India will be taxable in India.
US salary will generally not be taxable in India (unless you have income arising from Indian sources or any other conditions apply).
Profit from Stocks: The taxability will depend on the residential status and whether the gains are long-term or short-term, as well as where the stocks are traded.
Summary:
For FY 2012-13, you are likely a Resident for tax purposes, and your income from India and the US will both be taxable in India, but you can claim credit for taxes paid in the US.
For FY 2013-14, if you stay in India for less than 182 days, you may qualify as an NRI. As an NRI, your foreign income (US salary) will generally not be taxed in India, but income from India (e.g., Indian salary) will still be taxable.
Key Point:
In your case, if you stay less than 182 days in India for FY 2013-14, you will likely be considered an NRI, but ensure you meet the specific criteria laid out under the Income Tax Act to confirm your status. If in doubt, consulting with a tax expert is always a good idea.
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