Resident status when employed outside India, and definition of employment

753 views

Save Share

Join Us Follow Us Add as Source

Oshan

3 Points Posted on 21 July 2023

Hi,

I need help understanding resident status for a friend. Explaining below with example.

Kirti is an Indian citizen working with Deloitte for the past 3 years.
She got employed with Booking.com (Amsterdam) on 10 May 2021 and travelled to Amsterdam on the same day.
She returned to India twice during the FY 2021-22, and stayed a total of 95 days in India in the FY 2021-22.
In FY 2022-23, Kirti continued working with Booking.com in Amsterdam and visited her family in India for a total of 75 days.

I would like to understand the following -

What would be Kirti's residency for the purpose of Income tax filing in AY 2022-23?
What would be Kirti's residency for the purpose of Income tax filing in AY 2023-24?
I understand that a person traveling outside India for the purpose of employment, if stays in India for less than 182 days, is considered NRI. What is the definition of employment here.
1. Does it mean that they need to be working in an indian company and sent abroad for a project concerning the company
2. Would employment in an international company be considered for this exemption as well?
3. Would employment be considered if they travel for their own business?
4. (update- additional questions) Kirti has paid tax on her income in Amsterdam. Is she expected to pay tax on this income in India as well?

Thanks..!!

Replies (3)

Quick Summary

This discussion clarifies the tax residency status for Indian citizens employed overseas. It explains that if you leave India for employment abroad, you may be considered a Non-Resident Indian (NRI) if your stay in India is less than 182 days in the financial year. The definition of 'employment' for this exemption includes working for an international company, not just an Indian one sent abroad. It also addresses double taxation, confirming that income already taxed in another country, like Amsterdam, generally doesn't need to be taxed again in India for NRIs, thanks to Double Taxation Avoidance Agreements (DTAA).

Anurag Yadav

121 Points Posted on 21 July 2023

Kirti resided in India for both as she satisfying this condition

total stay in India at least 365 days during the previous four years and a minimum of 60 days in the current financial year

Oshan

3 Points Posted on 21 July 2023

Thanks for your reply @ anurag.

According to this link - https://incometaxmanagement.com/Pages/Tax-Ready-Reckoner/Residential-Status/Residential-Status-Of-An-Individual.html

if someone travels outside India for the purpose of employment, then they are exempt from the 60 day rule. For being an NRI they only need to stay outside india for more than 182 days.

An additional query I have is, Kirti has already paid tax on her income in Amsterdam. Is she supposed to pay tax on that in India as well?

CA Aakarsh Jain

10436 Points Posted on 21 July 2023

Hi Oshan, I'll be happy to help you.
Yes, she is non-resident as if a person leaves india for employment outside india, then only 1st condition will apply i.e. she will be non-resident if her stay is less than 182 days in the relevant FY.

If you can prove that you are employed in a company that is located outside india, then it is sufficient proof to avail of the above criteria. You can show the company registration address or your offer letter or salary slips, etc.

If a particular income is already taxed in Amsterdam, then you don't need to pay taxes in india as for NRIs. Only income accrue and arising in india is taxable. Also, DTAA is applicable.

If you need further help, then please check out your inbox once.