1. The Income Tax Act, 1961 defines a non-resident Indian (NRI) as an individual, being a citizen of India or a person of Indian origin, who is not a resident.
2. A person is of Indian origin if he, or either of his Indian parents, or any of his grandparents was born in undivided India.
3. The major difference between tax paid by a resident Indian and a Non-Resident Indian is that the latter only has to pay tax for his "Indian Income", and his "foreign income", i.e. income earned and accrued abroad, is completely exempted from tax in India.
4. "Indian Income" is income that accrues /arises (or is deemed to accrue/ arise) in India, or which is received (or deemed to have been received) in India, though it might have accrued/arisen elsewhere.
5. "Foreign Income" is that which accrues or arises (or deemed to accrue or arise) outside India AND received (or deemed to be received) outside India.
6. There is no need to file income tax return if you don’t have any income in India.
7. However, if the income accruing in India through capital gains, rent, dividend or interest is beyond the threshold limit, you are liable to file tax returns in India.
8. Therefore, you may not have to file tax returns in India as long as:-
a) You continue to receive your foreign salary in your foreign bank,
b) Your income in India (interest, etc.) remains within the threshold limit in each financial year of India, and
c) You don't claim any refund of taxes deducted at source (TDS), if any, on your incomes in India.
9. Currently, tax-free incomes available to NRIs are:
a) Interest earned on Savings Certificate
b) Interest earned on NRNR Deposit
c) Interest earned on FCNR(B) Deposit
d) Overseas income of NRIs
e) Remuneration or fee received by non-resident / non-citizen / citizen but not ordinarily resident 'consultants', for rendering technical consultancy in India under approved programmes including remuneration of their employees
f) Income of their family members which accrue or arise outside India
g) Interest on notified bonds.
10. When you eventually shift to India, you can review your situation of filing tax returns, depending on your proposed income avenues here, and if your duration of stay in India makes you an ordinary resident in India for taxation purposes.
11. Once you become so, then you'll have to file your tax returns in India for both your "foreign income" and "Indian income", although benefit of any Direct Tax Avoidance Agreement (DTAA) between India and the foreign country would apply.
12. You will be considered a resident Indian for taxation if:
a) you spend 182 days or more of a financial year in India, or
b) you stay in India for 60 days or more in that financial year along with a total period of 365 days or more in its past 4 years, or
c) You qualify as a resident Indian (as mentioned above) for at least 2 out of 10 preceding years, or
d) You spend 730 days or more in India during last 7 financial years preceding the relevant financial year.
13. Hence, you should consider these aspects too if you don't want to file tax returns while staying and working from India extensively.
2. A person is of Indian origin if he, or either of his Indian parents, or any of his grandparents was born in undivided India.
3. The major difference between tax paid by a resident Indian and a Non-Resident Indian is that the latter only has to pay tax for his "Indian Income", and his "foreign income", i.e. income earned and accrued abroad, is completely exempted from tax in India.
4. "Indian Income" is income that accrues /arises (or is deemed to accrue/ arise) in India, or which is received (or deemed to have been received) in India, though it might have accrued/arisen elsewhere.
5. "Foreign Income" is that which accrues or arises (or deemed to accrue or arise) outside India AND received (or deemed to be received) outside India.
6. There is no need to file income tax return if you don’t have any income in India.
7. However, if the income accruing in India through capital gains, rent, dividend or interest is beyond the threshold limit, you are liable to file tax returns in India.
8. Therefore, you may not have to file tax returns in India as long as:-
a) You continue to receive your foreign salary in your foreign bank,
b) Your income in India (interest, etc.) remains within the threshold limit in each financial year of India, and
c) You don't claim any refund of taxes deducted at source (TDS), if any, on your incomes in India.
9. Currently, tax-free incomes available to NRIs are:
a) Interest earned on Savings Certificate
b) Interest earned on NRNR Deposit
c) Interest earned on FCNR(B) Deposit
d) Overseas income of NRIs
e) Remuneration or fee received by non-resident / non-citizen / citizen but not ordinarily resident 'consultants', for rendering technical consultancy in India under approved programmes including remuneration of their employees
f) Income of their family members which accrue or arise outside India
g) Interest on notified bonds.
10. When you eventually shift to India, you can review your situation of filing tax returns, depending on your proposed income avenues here, and if your duration of stay in India makes you an ordinary resident in India for taxation purposes.
11. Once you become so, then you'll have to file your tax returns in India for both your "foreign income" and "Indian income", although benefit of any Direct Tax Avoidance Agreement (DTAA) between India and the foreign country would apply.
12. You will be considered a resident Indian for taxation if:
a) you spend 182 days or more of a financial year in India, or
b) you stay in India for 60 days or more in that financial year along with a total period of 365 days or more in its past 4 years, or
c) You qualify as a resident Indian (as mentioned above) for at least 2 out of 10 preceding years, or
d) You spend 730 days or more in India during last 7 financial years preceding the relevant financial year.
13. Hence, you should consider these aspects too if you don't want to file tax returns while staying and working from India extensively.