The foreign nationals are taxed in India as per their residential status. Various norms are made in the income tax act for taxability of foreign nationals in India. They are :
There are three categories of foreign nationals who are liable to pay taxes in India based on their residential status:
All the expatriates who moved from India to another country for a limited period of time that is for a period of six months or more are Non-residents. The major purpose for their migration is service, education, employment, residence and so on.
Following conditions must be fulfilled by them to be a Non-Resident Indian:
For this category of foreign nationals, the total income earned by them in India is taxable by the Indian taxation laws.
A Resident But Not Ordinarily Resident (RNOR) is considered after fulfilling two major conditions. These are as follows:
These type of foreign nationals are liable to pay tax on total income that is earned within India. They deemed to be a resident of India and have to pay tax for the total of his or her income earned within India, if they fulfil the following conditions according to the income tax law:
Those individuals who do not meet the requirements that are specified to be Resident but Not Ordinarily Resident (RNOR) are called as Resident and Ordinary Residents . All the income which is earned by them in a financial year from all over the world is taxable for these individuals.
All the incomes that are considered for any foreign nationals who are residing in India for taxation purpose are as follows:
Employment income : This includes -
Non-Employment Income : This includes-
Foreign nationals are also required to furnish various documents while filing their income tax returns in India. The documents they require are:
This form is very important and given by the employer of the individual. This form includes all the relevant information related to the income of the individual and the deductions if any made from the income of the individual throughout the financial year.
It is very important for foreign nationals to provide the bank statements that includes all transactions made in the taxation year. These transactions consist of all the investments, expenditure done, income accrued and so on.
The Tax Deduction at Source (TDS) Certificate is also called Form 16A. This form is furnished by taxation organisations. It includes details related to the tax deducted at source (TDS) on any other income that is earned by the individual.
Information of any property or asset must be given that is sold within India which has capital gains that are taxable as tax on the income received from the sale. The details regarding the sale of any asset or property is to be presented for filing income tax return.
Any investment related information of the individual that is not given in Form 16, are required as evidence for the same.
For foreign nationals there is a special benefit called as Double Tax Avoidance Agreement (DTAA). This agreement is done between both the countries which allow the individual to avoid paying any income tax in either of the countries. For incomes that can be taxable in both the country that is India and the other country, the taxpayer can take the help of Double Tax Avoidance Agreement (DTAA) and avoid paying tax in one of the countries. He or she will only be liable to pay tax for that income only in one country.
Any foreign national who is residing in India but is not a citizen of India is also liable to pay tax according to the income tax act, 1961. He or she will be taxed on all the income that is earned within India. There are various rules and regulations to find out the actual taxability of such individual for taxation purpose in India
Any individual who is residing and working in India but belongs to any other country is considered as foreign national.
Yes, all the foreign nationals are liable to pay tax in india under the income tax act, 1961. But the provisions for their taxation are different from that of a Indian citizen.
Yes, foreign nationals are liable to pay taxes on capital gains when they sell any capital asset within India.
Yes, foreign nationals are also required to file an income tax return in India by abiding various rules and regulations stated in taxation laws of India.
Complete guide covering all the basic tax related terms. So, that tax terms will not work as a road-stopper in your way!!
Comprehensive Guide containing all Information that you must know while filing of your ITR for FY 2018-19 (AY 2019-20).
Free Income Tax Calculator for Assessment Year (AY) 2018-2019 and AY 2017-2018 with new budget changes.
Calculate HRA exemption based on your salary for AY 2018-19. Make accurate calculations of HRA for employees.
Hire smartest eCA's to File Your Income Tax Return. CA Assisted Filing of ITR. File your Income Tax Return with confidence and ease.
Tax2win is an efiling portal to prepare and efile income tax return Online. Tax2win helps individuals to file their income tax return.