Residential status and taxability in Malaysia

An indivisual resident has been offered employment in Malaysia wherin the job design is such that he will be working for 28 days on site followed by a break of 28 days. He will be in India for most of his break.

He has never gone out of India in the previous years.The employment is permanent.He will be provided residence in Malaysia and all his expenses of staying will be borne by the employer.He will not be engaged in any other job and will have no other source of income in Malaysia as well as in India.He will be paid in USD. His employer will be directly crediting his salary in his NRE account.

Please advise as to his residential status and that where will his salary be taxed,in India or Malaysia?

Replies (7)

As per sec. 6 (1) (a) a person becomes resident in India if he is physically present in India for a substantial period(i.e.more than 181 days) of time during the relevant financial year.

As per sec. 6 (1) (c), if a person is present in India for more than 364 days in 4 years preceding the previous year, then the substantial period during the financial year is reduced from more than 181 days to more than 59 days.

Since the person was in India during the Previous years, He will be resident.

What about taxation issues?

Dear Neha,

 

Since it is likely that he will be in india for more than 182 days, he total income will be taxable in india.,

 

 

Sec 6(1)(c) is not applicable in the above case because he went on Employment outside india. Calculate the no of days of Stay in India.If it is 182 days or more then he is resident of india. If he becomes resident,his global income is taxable in india.So,Salary earned in Malaysia is taxable in india. Try to plan in such a way that the stay in india is maximum 181 days so that he can save tax
Hw do u get job plz tell me too
Try to go through DTAA with malasia and check whether the malasian co. Has deducted tds on the income earned there...

Thank you very much for the responses. They were really helpful.

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