NRI's CORNER
F.E.M.A.
OVERSEAS INCOME

NRIs CORNER - OVERSEAS INCOME

1.
BASIS OF CHARGE OF INCOME :
 
Charge of income under the provisions of Income Tax Act, 1961 is mainly based on :
 
.01
residential status of a person,  vis-à-vis
 
.02
accrual and / or receipt of income , i.e. within India or outside India.
2.
RESIDENTIAL STATUS :
As defined at
Residential status is defined as under :
 
.01
RESIDENT -
 
.02
NON-RESIDENT - a person who is not a Resident is termed as Non Resident and
 
.03
RESIDENT BUT NOT ORDINARILY RESIDENT (i.e. R but NOR)
3.
SCOPE OF TOTAL INCOME :
 
Now, based on the residential status, the scope of tax and total income of a given financial year , i.e. a year commencing on 1st April and ending on 31st March is framed as under :
 
.01
RESIDENT : is subject to tax in India as regards :
 
 
(i)
all incomes arising or accruing in India.
 
 
(ii)
all incomes received in India, and
 
 
(iii)
all income arising or accruing outside India (global income)
 
 

 
 
Non Resident: (Subject to exemptions and concessions, provided in the Income Tax Act, 1961) is subject to tax in India as regards :
 
 
(i)
all incomes arising or accruing in India, and
 
 
(ii)
all incomes received in India
 
 

 
 
R but NOR : (Subject to exemptions and concessions, provided in the Income Tax Act, 1961) is subject to tax in India as regards :
 
 
(i)
all incomes arising or accruing in India, and
 
 
(ii)
all incomes received in India
 
 

4.
OVERSEAS INCOME :
 
01.
As clearly mentioned under the subject of "Basis of Charge" in case of a person who is :
(i)  NON-RESIDENT and
(ii) Resident  but NOR ( R but NOR )
entire income arising / accruing out of India is exempt from Income Tax in India.
 
02.
Even in case of  a returning NRI, entire global income, be that  interest on bank deposits, income from shares and securities, rental income, capital gains, and all other foreign income will be totally exempt from tax in India so long as such person continues to be Non Resident or R but NOR under the ITAct,1961.
 
03.
And even after becoming a RESIDENT ,[ i.e. a Resident and Ordinarily Resident ]  the global income of a returnee NRI will be subjected to tax in India  as per the provisions/benefits of  Double Tax Avoidance Agreement, if any as the same over-rides the provisions of the ITAct,1961.
 
 
 
 

alttag