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INCOME TAX FOR FOREIGN NATIONALS / EXPATRIATES IN INDIA
Any individual who is not a citizen of India is considered a foreign national. However, whether a foreign national is liable to pay Indian income tax is dependent on the individual’s physical presence in India, regardless of their citizenship or the purpose of the stay.
According to India’s Income Tax Act (ITA), there are three levels of residency for tax purposes:
Non-resident – these individuals are not liable to income tax;
Resident but not Ordinarily Resident (RNOR) – these individuals are taxed on their worldwide income; and
Resident and Ordinary Resident (ROR) - these individuals are tax only on their Indian sourced income.
To qualify as a non-resident, an individual must not stay in India for more than 182 days during a fiscal year (FY), or more than 365 days in four consecutive FYs preceding the relevant FY. Any individual not meeting these conditions becomes a resident for tax purposes either as a ROR or RNOR.
The Indian tax year i.e. Fiscal year (FY) runs from April 1 to March 31. Total income tax is calculated in accordance with the tax rates and rules that stand on the first day of April of the assessment year.
Components of Income
In India, Income is categorised in 5 categories i.e.
Income from Salary
Income from House Property
Income from Business of Profession
Income from Capital Gains
Income from Other Sources
FILING INCOME TAX RETURN
Income tax return has to be filed online. A computation of income will be prepared taking into account the income of the Assessee. Since most of the expatriates are working in India, they will be treated as RESIDENT and worldwide income will be taxable.
The income tax return has to be filed by 31st July for the preceding Fiscal year (FY).