Moving Out of India Consultancy

A person who is not a resident of India is considered to be a Non-Resident of India (NRI). You are a resident if your stay in India in a given financial year for : 182 days or more 60 days or more and 365 days or more in the 4 immediately preceding previous years. In case you do not satisfy either of the above conditions, you will be considered an NRI.

An NRI, like any other individual taxpayer, must file his return of income in India if his gross total income received in India exceeds Rs 2.5 lakh for any given financial year. Further, the due date for filing a return for an NRI is also 31 July of the assessment year or extended by the government.

An NRI’s income taxes in India will depend upon his residential status for the year as per the income tax rules mentioned above. If your status is ‘resident’, your global income is taxable in India. If your status is ‘NRI,’ your income earned or accrued in India is taxable in India. 1. Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on a savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. 2. Income which is earned outside India is not taxable in India. 3. Interest earned on an NRE account and FCNR account is tax-free. Interest on NRO accounts is taxable in the hands of an NRI.

In case of resident individuals and companies, their global income is taxable in India. However non-residents have to pay tax only on the income earned in India or from a source/activity in India.

You can authorize any person by way of a power of attorney (POA) to file your return. A copy of the power of attorney should be enclosed with the return.

Before moving out of India, an individual should initiate closure of all the savings bank accounts, consolidate them and switch to an NRO account. An NRO savings account is where you can maintain and manage your income earned in India, such as from rent, dividends and pension. Some banks even allow to re- designate your existing bank accounts into NRE accounts also.

It is also good to check whether the country of migration has a DTAA (Double Tax Avoidance Agreement) with India. There are many countries with which India has a tie-up to ensure there is no double taxation on income earned in one country and taxes are paid in both countries. This is to ensure that taxes are not paid twice.

Yes, if an NRI’s tax liability is expected to exceed Rs. 10,000 in a financial year, he must pay advance tax. Interest under Section 234B and Section 234C will be levied if advance tax is not paid.