NRIs’ overseas income is not taxable in India

I am joining a company in Dubai next year. I will be moving there for three-four years. I have heard that the income earned in Dubai is tax-free, but Indian residents are taxed on their global income. Will my earning there be taxed here? I will receive income in my Dubai account. Please clarify.

—Joyita Das

Whether or not your income will be taxable in India depends on your residential status. You need to check it as per the income tax for each financial year in question. A taxpayer would qualify as a resident if he or she satisfies one of the following two conditions : a) stay in India for a year is 182 days or more or; b) stay in India for the immediately four preceding years is 365 days or more and 60 days or more in the relevant year.

In the event an individual who is a citizen leaves India for employment during a year, he or she will qualify as a resident only if the person stays for 182 days or more. Such individuals are allowed a longer time greater than 60 days and less than 182 days to stay. Effective financial year 2020-21, this period of 60 days is reduced to 120 days or more for such an individual whose total income (other than from foreign sources) exceeds ₹15 lakh.

Additional conditions: you are a resident in two of the 10 years immediately preceding the relevant year; and you are in India in the seven years immediately preceding the relevant year for 729 days or more. If you meet any of the first set of conditions and both the additional conditions, you shall be considered a resident in India. If you meet any of the first conditions but do not meet the additional conditions, you shall be considered a resident but not ordinarily resident (RNOR) in India. If you do not meet any of the first conditions, you shall be a non-resident in India.

Non-resident Indians (NRIs) and RNORs are only taxed on income which is earned, accrued or received in India. Those who are residents must pay tax on global income. To make sure their income is not doubly taxed, taxpayers can take advantage of the Double Tax Avoidance Agreement between two countries.

Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at mintmoney@livemint.com