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5 things to know about your NRI status and tax in India

If you have moved abroad recently, one of the things you might be worried about is your tax compliance in India. If you have to pay your taxes or file a tax return, the first thing you must understand is your residential status.

Here are 5 things you must know:

  • What makes you an Indian resident?

You have been in India for 182 days or more in a financial year. You have been in India for at least 365 days in the 4 preceding years and at least 60 days in the current financial year. If you do not satisfy both conditions, you are an NRI.

  • What makes you a Resident but not Ordinarily Resident?

You are a resident for at least 2 out of the 10 preceding years of the financial year. You have been in India for 730 days or more in the last 7 years.

  • Taxable income

Any income originating in India or received in India is taxable for you. This could be money via rent or services provided in India.

  • Double Tax Avoidance Agreement

When taking any Indian-earned income back to your residential country, you will be taxed in the latter. To avoid that, you must take the benefit of DTAA, hence saving on taxes on the same income twice.

  • General tax rules

If you are a Resident but not Ordinarily Resident or RNOR, your entire income is taxable regardless of where you earned it. Likewise, your income sourced from India will be taxable too. If you are an NRI however, only your income in India is taxable.

The bottom line

Your taxes depend on your status as a Resident or Non-Resident Indian. But you can follow this as an easy thumb rule: any income that originates in India attracts tax in the country.

Learn about the income tax slabs in India.

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