Will My Income That is Earned Abroad be Taxable in India?

We are all aware that the Government cannot function in absence of taxes that it collects from the people. The Indian Income Tax Act, 1961, under the section NRI taxation lays down rules and procedures for people earning outside the country. It is of paramount importance to note that Income Tax rules, obligations and exemptions allowed to NRIs’ is vastly different from that applicable to an Indian citizen.

How the Residential Status of a Person determined?

Is My Income Earned Abroad Taxable in India?

Condition 1

For any given financial year, you are classified as an Indian resident if you are in the country for 6 months (182 days to be more precise) or more in a financial year. The same applies to a Person of Indian Origin (PIO) on an Indian visit. You can be classified as PIO if either of your parents or grandparents were born before the country was partitioned.

Or

An individual’s stay in India is for a duration of two months or sixty days in a financial year or that individual has lived for 365 days or more during the last four years preceding immediately the current year

Taxable Income for an NRI

Income that you receive or for that matter someone else receives on your behalf as salary in India is taxable. Therefore, if you are an NRI and your salary is directly transferred to an Indian account, you will be required to pay taxes as per the existing Indian tax laws. This income is taxed at the slab rate you belong to.

Will I be taxed for Income that I earn Abroad?

An NRI’s income tax obligations in India for a particular financial year depends upon his residential status. If it is determined that you are a resident of the country, your income earned outside the country is liable for taxation in the country. On the other hand if it is determined that you are an NRI, your income that you earn in India will only be taxable. Examples of income earned in India are as following:

  • Salary that you earn in India for services rendered in the country.
  • You have a house property in the country and you derive an income from it
  • Interest and income earned from fixed deposits
  • Interest earned from saving bank account(s) in India.
  • Capital gains accrued on account of sale of assets in the country

Income that you receive outside India will not be taxed in the country. Interest that you earn on an NRE account and FCNR account is exempted from tax. However, interest earned on NRO account is subjected to income tax.

Am I Required to File My Income Tax Return in India?

Irrespective of whether you are an NRI or a resident of the country, you have to file the Income Tax if your income in a financial year exceeds INR Rs.2, 50,000.

What is the Last Date for NRIs to file their Income Tax Return in India?

The last date for NRIs to file their Income Tax return in India is July 31st