18 January 2013
Mr X resident and ordinary resident of India leaves for Dubai for the purpose of employment in November 2013 - Is he liable to pay tax on India for salary earned in Dubai?? if yes, what is the rate of taxation?? is there any way he can avoid tax on salary earned in Dubai???
18 January 2013
I guess the month would be Nov12. Yes as he is resident for the FY 2012-13 in india he need to file the income tax return for both the income (india & dubai) in his income tax return. Now he is also eligible to take the credit of taxes paid there based on DTAA.
An individual is taxed based on his residential status in India. The residential status, in turn, is determined based on the physical stay of an individual in the relevant financial year (tax year) as well as preceding ten tax years. This is particularly relevant in respect of Indians working overseas or having income outside India.
Broadly, and individual could be a resident or a non-resident in a particular tax year. Once an individual’s residential status is determined to be a resident, it is further examined whether he is an ordinary resident or not an ordinary resident in India.
An individual is said to be a resident in India if he fulfils any of the following two conditions. First, if he is present in India for a period of 182 days or more in that tax year OR second, if he is present in India for a period of 60 days or more during the relevant tax year and at least 365 days or more during the four preceding tax years. In case an individual does not satisfy any of the above two basic conditions, then he is said to be a non-resident.
In the case of a citizen of India, who leaves India in any tax year for the purposes of employment outside India, the above said period of 60 days is substituted by 182 days. This is particularly beneficial for individuals going and working overseas in a particular tax year. Similarly, in the case of a citizen of India or a person of Indian origin who being outside India, comes on a visit to India in any tax year, the above said period of 60 days is substituted by 182 days. This is helpful for non-resident Indians who visit India for family or other purposes.
CAclubindia
