tax in india on salary of a merchant navy sailor as NRI
This query is : Resolved
12 October 2009
Please advise whether salary received by a NRI Merchant Navy Sailor in $ and being remitted in his bank A/c maintained in india is taxable in india, should he file his ROI in India.
12 October 2009
Dear Raj Kumar Kpoor,
The taxability of Income earned outside India depends on residential Status of the individual. As you have said NRI, I assume he is not resident and so his salary wont be taxable on the ground of mere remittance.
Here remittance means transfering of funds from foreign Bank A/c. to Indian Non resident Accounts. If he is recieving Salary in USD in his Non Residents Indian Bank Account, the view can be different.
As no tax would be levied, filing ROI is not compulsory.
Thanks
The taxability of Income earned outside India depends on residential Status of the individual. As you have said NRI, I assume he is not resident and so his salary wont be taxable on the ground of mere remittance.
Here remittance means transfering of funds from foreign Bank A/c. to Indian Non resident Accounts. If he is recieving Salary in USD in his Non Residents Indian Bank Account, the view can be different.
As no tax would be levied, filing ROI is not compulsory.
Thanks
13 October 2009
This question arises a query of who/what is a Resident of India and who/what is not a resident of India. The IT department has defined these entities. An Individual is defined as a resident in India in the previous year if he/she satisfies one of the following conditions:
1. He/she has spent a total of 182 or more days in India in the assessment year.
2. If he/she has spent a total of 60 days or more in the assessment year and has spent a total of 365 days in the previous four years. For example in case the assessment year is 2008-09, then if you have spent >60 days in India between 1st April 2008 and 31st March 2009 and a total of >365 days during 1st April 2004-31st March 2008.
3. For anyone who is in the merchant navy (but, on an Indian Ship) or has gone out of the country for employment, the above clause will become 182 days in the assessment year and 365 days in preceding four years. The IT department also states very clearly that if a person is deemed resident for one source of income, then, he will be counted as resident for all incomes in that particular year.
Raj Ji,
You need to answer 2 questions : 1.Is he on an indian Ship ?
2. Is he a resident in india ( provisions explained above )?
If hes a resident in india , according to the above explanation , then his income is liable to be taxed in india .
If hes not a resident in india , we can make a further discussion of RNOR :-
A person is said to be not ordinarily resident in India if that person satisfies any one of the following criteria:-
a) Has been a non-resident in India in nine out of ten years preceding the year of assessment.
b)Has spent less than 792 days combined during a period of 7 years prior to the assessment year. Now that we have suitably understood who is defined as a Resident Indian for the purposes of Income tax, lets look at which of their income is deemed Indian. The following are considered to be income accrued in India. Any income which is gained from or through any business connection in India. This could be directly or indirectly. Incomes which are received from a property which is situated inside Indian borders. Through or from any source based in India and from the sale of a capital asset inside India. Thus what the IT department says is that if they can clearly define that the source of the income is in India then the Income too is accrued in India.
Apart from this it has to be noted that any salary paid in india will be taxed in india cos its deemed to accrue in india
Accordingly ROI should be filed , if taxable in india
1. He/she has spent a total of 182 or more days in India in the assessment year.
2. If he/she has spent a total of 60 days or more in the assessment year and has spent a total of 365 days in the previous four years. For example in case the assessment year is 2008-09, then if you have spent >60 days in India between 1st April 2008 and 31st March 2009 and a total of >365 days during 1st April 2004-31st March 2008.
3. For anyone who is in the merchant navy (but, on an Indian Ship) or has gone out of the country for employment, the above clause will become 182 days in the assessment year and 365 days in preceding four years. The IT department also states very clearly that if a person is deemed resident for one source of income, then, he will be counted as resident for all incomes in that particular year.
Raj Ji,
You need to answer 2 questions : 1.Is he on an indian Ship ?
2. Is he a resident in india ( provisions explained above )?
If hes a resident in india , according to the above explanation , then his income is liable to be taxed in india .
If hes not a resident in india , we can make a further discussion of RNOR :-
A person is said to be not ordinarily resident in India if that person satisfies any one of the following criteria:-
a) Has been a non-resident in India in nine out of ten years preceding the year of assessment.
b)Has spent less than 792 days combined during a period of 7 years prior to the assessment year. Now that we have suitably understood who is defined as a Resident Indian for the purposes of Income tax, lets look at which of their income is deemed Indian. The following are considered to be income accrued in India. Any income which is gained from or through any business connection in India. This could be directly or indirectly. Incomes which are received from a property which is situated inside Indian borders. Through or from any source based in India and from the sale of a capital asset inside India. Thus what the IT department says is that if they can clearly define that the source of the income is in India then the Income too is accrued in India.
Apart from this it has to be noted that any salary paid in india will be taxed in india cos its deemed to accrue in india
Accordingly ROI should be filed , if taxable in india
04 July 2016
Though this is a very old query, readers will do well to check a recent 2016 ITAT decision in the case of Tapas Kr. Bandopadhyay vs. Deputy Director of Income-tax, (IT)-3(1), Kolkata as reported in [2016] 70 taxmann.com 50 (Kolkata – Trib.).where it is clearly laid out that in case salary is directly received in Indian bank account, it will be taxable in India as the income is considered to have been "received" in India. Hence, a good strategy is always to receive it in overseas bank account & then remit it to India. - In such a case, there is a 2013 ITAT decision that says it will not be taxed as income received in India.
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