How is tax calculated for income earned by non-resident Indians?

Taxability of income in India depends on the residential status in India, the source of income, and the place of receipt of income. The residential status is determined based on an individual’s physical presence in India during a fiscal year (FY), including work days and non-work days, and the preceding 10 FYs. For Indian citizens, even if they do not become residents based on physical presence in India, they can still become resident but not ordinarily residents based on the absence of liability to pay tax in any other country or territory by reason of domicile or residence or any other criteria of a similar nature, if India sourced income exceeds ₹15 lakh. Residential status is dynamic and needs fresh determination for each FY.

An individual qualifying as resident and ordinarily resident (ROR) is taxable on his worldwide income in India and is required to report all foreign assets in the India income tax return. Also, the income earned from such foreign assets during the relevant FY along with nature of income and head of income under which such income has been offered to tax in the India income tax return needs to be reported in relation to each foreign asset.

An individual qualifying as non resident (NR) or resident but not ordinarily resident (RNOR) is taxable on the following: income accruing or arising in India;. income deemed to accrue or arise in India; income received or deemed to be received in India; cncome accruing or arising outside India if the income is derived from business controlled in or profession setup in India (for RNOR).

As you have been outside India for past four years, it is likely that you may qualify as non-resident of India, assuming your India sourced income is less than ₹1,500,000. As a non resident, salary earned for employment exercised outside India and received outside India will not be taxable in India. If salary income for employment exercised outside India is directly received in India, it will be taxable in the country.

Your personal income in India such as interest income from banks, dividend income from shares, mutual funds, etc, rental income from house property in India will be taxable in India. You will need to deposit income tax by way of advance tax in four instalments (15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March) or before filing of a tax return by way of self-assessment tax along with interest by 31 July.

Sonu Iyer is tax partner and people advisory services leader, EY India.