Adolf H (Designation) (21 Points)
06 August 2024I am in UAE from last 2 years, I invested some money in US stock markets.
If I move back to India,
* can I continue with my US/UAE trading account legally from India? --which has UAE tax id
* what are tax liabilities in India if I continue to be NRI (non resident Indian) or become NOR (not ordinary resident) or (ordinary) resident?
* do I need to show my foreign investments (UAE and US)? --as assets only or I need to furnish detailed trades/transactions too being NRI/NOR/resident?
Asha Kanta Sharma
(Manager - Finance & Accounts)
(36355 Points)
Replied 07 August 2024
Navigating tax implications and regulations on foreign income can be complex, especially with multiple jurisdictions involved. Here’s a detailed breakdown of how it works if you’re moving back to India:
### 1. **Continuing with US/UAE Trading Accounts from India**
- **Legality:** Yes, you can generally continue to operate your US/UAE trading accounts from India. However, you must ensure compliance with both Indian regulations and those of the countries where your accounts are held.
- **Tax ID:** Your UAE tax ID might be relevant for your transactions in UAE or US, but Indian authorities will primarily look at your Indian tax residency status and compliance with Indian tax laws.
### 2. **Tax Liabilities in India Based on Residency Status**
Your tax liabilities in India will depend on your residency status:
#### **NRI (Non-Resident Indian):**
- **Tax on Foreign Income:** As an NRI, you are generally not taxed in India on income earned outside India. However, you are still required to report your foreign income and assets in your Indian tax return.
- **Reporting:** You need to disclose your foreign income and foreign assets in your Indian tax return. This includes your US stocks and any income from them.
#### **NOR (Not Ordinary Resident):**
- **Tax on Foreign Income:** NORs are taxed in India on income earned or accrued in India and income that is deemed to be received in India. Income earned abroad is not taxable, but you must still report it.
- **Reporting:** You need to disclose your foreign income and assets in your Indian tax return.
#### **Resident (Ordinary Resident):**
- **Tax on Foreign Income:** Residents are taxed on their global income, which includes income earned outside India. This means any income from your US stocks will be subject to Indian tax.
- **Reporting:** You must disclose both foreign income and foreign assets. Detailed information about your foreign investments, including transactions, may be required.
### 3. **Disclosure Requirements**
- **Assets Only or Detailed Transactions?**:
- **Assets:** As part of the income tax return, you must disclose foreign assets, including the value of your US and UAE investments, as of March 31 of the financial year.
- **Detailed Transactions:** While you must disclose the value of your foreign assets, detailed trades and transactions might not be required unless specifically asked for or if it affects your tax liability (e.g., capital gains). However, maintaining detailed records is advisable for accurate reporting and compliance.
### **Additional Points to Consider:**
- **Filing of Returns:** Ensure you file your tax returns in India accurately and timely, including all disclosures required under Indian tax laws.
- **Double Taxation Avoidance Agreement (DTAA):** India has DTAA agreements with many countries, including the US and UAE. These agreements might provide relief from double taxation, so you should review them and potentially consult a tax advisor for any applicable benefits.
- **Income from Foreign Assets:** Any income, such as dividends or capital gains from your foreign investments, should be reported in your Indian tax return. You may need to convert this income into Indian Rupees using the exchange rate on the date of receipt.
### **Recommendations:**
1. **Consult a Tax Professional:** Given the complexity of international tax regulations and the potential for significant financial impact, consulting a tax advisor with expertise in Indian and international taxation is highly recommended.
2. **Keep Detailed Records:** Maintain comprehensive records of all foreign transactions, investments, and income for accurate reporting and compliance.
3. **Understand DTAA Benefits:** Review the DTAA provisions between India and the countries where you have investments to understand any tax relief or credits available.
Following these guidelines will help you manage your tax liabilities and ensure compliance with Indian tax regulations.
CAclubindia
