Status for individual whether nri/resident

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Rashmi (Querist)
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01 August 2012 Dear Team,

I come across one of my friend who had the below issue with his employer pertaining to his status whether he is NRI or Resident and his employer has give the below solution. Please clarify the below points which are being answered by employer.

Friend: I was on US assignment from 16th July 2010 to 31st Dec 2011. I have filed the income tax return in US for year 2010 and 2011. Why I am treated as ordinary resident?

Employer - Please note that an individual is treated as a resident in India during a tax year, i.e. April 1 to March 31, if he satisfies any of the following two basic conditions -
He stays in India during the tax year for 182 days or more; or
He stays in India for 60 days or more during the tax year and 365 days or more during the four tax years immediately preceding the relevant tax year (in case of an Indian citizen who leaves on employment overseas, the 60 days is replaced with 182 days).

Based on the information provided by you in the India tax organiser we understand that you satisfy the second condition above and hence you qualify as a resident in India for the tax year 2011-12.

Further, a resident individual is treated as a ‘Resident and Ordinarily Resident’ (ROR) if he has been a Resident in India in at least two out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of seven hundred and thirty days or more. Else he would be treated as a ‘Not Ordinarily Resident’(NOR).

Based on the information provided by you in the India tax organiser we understand that you satisfy both the conditions mentioned above and hence you qualify as a Ordinary resident in India for the tax year 2011-12.

Friend: Do I need to provide US income details for 17th July 2010 to 31st march 2011 which was not computed for this year?

Employer: Please note that your US income and tax withheld details for the period July 17, 2010 to March 31, 2011 would have been considered in your India tax return for the year 2010-11.

Please clarify the answer given by the employer.

Thanks in advance

Amol S Joglekar

Amol S Joglekar (Expert)
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01 August 2012 There are 2 main categories under Income TAX. 1.Non Resident (NR) 2.Resident.(R) Under category2 again there are 2 categories viz. A. Resident and ordinarily resident (RAOR)and B. Resident but not ordinarily resident.(RBNOR) Your case falls under RBNOR. Please check that and get back for any further details.

Rashmi

Rashmi (Querist)
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01 August 2012 Dear Amol S,
In short, if it is required to be known. i.e. does he needs to pay taxes in India on the income that he got from USA company in dollar and paid the taxes as per US tax law since he was employed with US based Company ?

Amol S Joglekar

Amol S Joglekar (Expert)
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02 August 2012 You need to check up the DTAA agreement with USA. Contracting state is India, I presume. As far as my memory goes, if tax is paid in US as per US Fedral Regulations, the income need not be offerred for Indian Income Tax. Please check the DTAA. It is available on incometaxindia.gov.in. Right hand top in pull down menu.

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Rashmi

Rashmi (Querist)
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02 August 2012 Thank you Mr. Amol. :-)

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