How to file an Income Tax Return in India

(if you are a foreign national)

Who is an expatriate or foreign national in India?

Any individual who is not an India citizen, but lives in India is an expatriate or expat.

Are expats liable to pay tax in India?

Any individual can make income in India either by working here or providing services. In both the case that individual is liable to pay tax in India, whether or not he or she is a citizen of India. This charge can also be subjected to Tax Deducted at Source or TDS in India.

If his or her total income is less than the minimum exempt income, he or she can get a refund by filing an IT return in India.

How is an expat’s income taxed when he or she becomes an Indian resident?

The taxability of the profits earned in India entirely depends on the residential status.

For an Indian resident, the total amount of the profit earned anywhere across the world is liable for taxation in India. It includes the profits earned in the nation of citizenship. It can also be taxed in the country of citizenship.

If an expat is an NRI (Non Resident Indian) or RNOR (Resident but Not Ordinarily Resident), then only the income made in India is taxable in the country.

Therefore, checking out the residential status is important in the first place.

According to the rules of the India IT Act, once an expat arrives in India, he or she can enjoy the Resident but Not Ordinarily Resident status for the first two years and need to pay tax only on the income made in India.

Can an expat leverage the benefit of DTAA?

DTAA or Double Tax Avoidance Agreement is an agreement signed between two countries that allow the evasion of tax and related liabilities on the income made in both the countries. In case the profits made by an expat are liable for tax in India and the other country, he or she can go for DTAA.

In case, your earnings that’s taxable in a foreign country, it has to be presented to tax in India. Our CAs at MyOfficeStaff can help you with this.

Neha is an expat working in a school in Chennai, India, since 1 year. She is the resident of UK. She gets 1000 pounds every month as salary. Will she be taxed in India for the same? Neha is liable to pay tax on 1200 pounds she gets. This income is made in India and yes it’s taxable, regardless of the residential status. A Tax Deducted at Source of INR 4,00,000 has been subtracted on her profit by her employer, the school. Neha is a Non Resident Indian. And, according to the Income Tax Act, NRIs are taxable on their income in India.

Neha’s profits from her employer should be converted in INR and she would have to pay tax on the same. She can easily regulate the tax of INR 4,00,000. If this amount is taxable in UK, she can go for DTAA.