Residential status and tax liability

Any comments on this please

Any comments on this please ?

Having a vacation in India during September definitely changes the situation as the count for no of days to calculate residential status changes. While determining the NODs, nature of travel is not taken into consideration. The "travel for employment abroad" clause comes to play after the NODs are already determined as per passport entries. Besides, as per your example, the person has not travelled "for the purpose of employment outside India". Instead he has "Travelled outside India for temporary work of the Indian firm which was outside India" The intent of the proviso could be interpreted as applicable t people who leave India to awail foreign employment and might not be returning anytime soon.

Thank you rashi for your comments. I understood from your reply that the status of the person becomes resident since his vacation days in india will counted and he will end up being resident for tax purpose after his return to India on 20th oct.

Considering that he went abroad for employment purpose. When he comes back to india on 20th oct and his status is resident, if he travel to lets say Nepal for 1 month of vacation in Jan 2016, just to make his stay in Indian less than 182 days in FY 2015- 2016, would that change his status to NRI and make his Finland income tax free in India ..

Waiting for your comments on this. Thanks for your time. Please let me know if something is not clear.

 

Not sure about Nepal, but yes if he goes abroad for whatsoever purpose, the stay in India would be reduced below 182 days. Just make sure that originally he must be leave India for employment outside India. Not just a foreign trip for Indian co.

Thanks Rashi for your comments. Considering that he went originally to Finland for employment purpose only. Still can he go to abroad for just a vacation trip so that his days in India get less than 182  and he avoids paying taxes on Finland earned income ?

 

Many Thanks

Suren

" Determining whether resident or non-resident

Under the Income-tax Law, an individual will be treated as a resident in India for a year if he satisfies any of the following conditions (i.e. may satisfy any one or may satisfy both the conditions):

(1) He is in India for a period of 182 days or more in that year; or

(2) He is in India for a period of 60 days or more in the year and for a period of 365 days or more in 4 years immediately preceding the relevant year.

If an individual does not satisfy any of the above conditions he will be treated as non-resident in India.

Note : Condition given in (2) above will not apply to an Indian citizen leaving India for the purpose of employment or to an Indian citizen leaving India as a member of crew of Indian ship or to an Indian citizen/person of Indian origin coming on a visit to India. A person is said to be of Indian origin, if he or any of his parents or grand-parents (maternal or paternal) were born in undivided India."

 

 So Yes, If his total stay in India is less than 182 days, he would be a non resident and liable to tax only for Indian income.