Mr. Aditya left India for the first time on 8th September, 2018 for employment in USA. He was employed in India with a company for 9 years till 6th September, 2018 . Is he a resident of India for F.Y.2018-19? Whether salary or any other Income earned in USA will be taxable in India?

For the purpose of Income tax in India, the income tax laws in India classify taxable persons as :

  1. Resident.
  2. A Resident not ordinarily resident (RNOR)
  3. A non- resident (NR).

The taxability differs for each of the above categories of taxpayers.
A taxpayer would qualify as a resident of India if he satisfies one of the following 2 conditions:

  1. Stays in India during the previous year for 182 days or more or
  2. Stays in India :
    1. for the immediately 4 preceding the previous year is 365 days or more and
    2. for 60 days or more in the relevant previous year.

In the event an individual leaves India for employment during an FY, he will qualify as a resident of India only if he stays in India for 182 days or more. This otherwise means, condition (2) above of 60 days would not apply to him.

If an individual qualifies as a resident, the next step is to determine if he/she is a Resident Ordinarily Resident (ROR) or a Resident Not Ordinarily Resident (RNOR).
He will be a ROR if he meets both of the following conditions:

  1. Has been a resident of India in at least 2 out of 10 years immediately preceding the previous year and
  2. Has stayed in India for at least 730 days in 7 immediately preceding the previous year.

Therefore, if any individual fails to satisfy even one of the above conditions, he would be an RNOR.

In the given case Mr Aditya is leaving for USA for employment. Hence only first condition will be applicable to him i.e. he should stay in India for a period of 182 days or more to be qualified as a resident.

For the financial year 2018-19, Mr Aditya has stayed in India for 162 days i.e from 1st April, 2018 to 9th September, 2018 which is less than 182 days. Hence Mr. Aditya will be considered as a Non-resident for financial year 2018-19.

Incomes which are chargeable to tax in India :

Only Income earned in India i.e Interest on bank deposits or Savings bank account , any capital gains from asset in India etc., by a non –resident is taxable in India as per Income tax laws.
Income earned abroad i.e  salary in the case of Mr Aditya earned in USA will not be taxable in India.

Hence, Salary or any other Income earned in USA will not be taxable in India.


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