An ROR is required to report all foreign assets in India ITR
PremiumTaxability in India depends on residential status, source of income and place of receipt of income
I’m an OCI cardholder and have been working solely in India as a self-employed doctor and paying my taxes in India for the past 15 years. I want to go back to the UK where my family resides and become an NRI, but still want to continue my work in India as a doctor. What is the maximum number of days in a year I can work in India as a self-employed doctor without losing my NRI status?
—Name withheld on request
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Taxability in India depends on residential status, source of income and place of receipt of income. Residential status is determined on the basis of physical presence of an individual in India during a financial year (FY), including work days and non-work days, and the preceding 10 FYs. Residential status needs fresh determination for each year.
An individual qualifying as a resident and ordinarily resident (ROR) is taxable on his worldwide income in India and is required to report all foreign assets in the India income tax return (ITR).
For FY22 (FY of leaving India)
An individual, who is a foreign passport holder, may qualify as a non-resident (NR) in India under the following scenarios:
* Physical presence in India is less than 60 days during FY22; or
* Physical presence in India is 60 days or more but less than 182 days during FY22 and less than 365 days in the preceding four FYs.
Thus, for FY22, due to your past physical presence in India, you may not qualify as an NR of India.
For FY23 and onwards (FYs based in the UK)
An individual, who is a citizen of India or a person of Indian origin, who being outside India, comes on a visit to India, will continue to qualify as an NR in India under the following scenarios:
* Physical presence in India during the relevant FY is less than 182 days and India-sourced income is less than ₹15 lakh; or
* Physical presence in India during the relevant FY is less than 120 days even if India-sourced income exceeds ₹15 lakh; or
* Physical presence in India during the relevant FY is 120 days or more but less than 182 days and less than 365 days in the preceding four FYs even if the India-sourced income exceeds ₹15 lakh.
For the above purpose, a person of Indian origin means an individual, or either of his/her parents or any of his/her grandparents, was born in undivided India.
However, for an individual, who is a citizen of India or a person of Indian origin, who being outside India, comes on a visit to India, will qualify as an RNOR if his/her:
* Physical presence in India is 120 days or more but less than 182 days during the relevant FY; and 365 days or more in the preceding four FYs; and
* India-sourced income exceeds ₹15 lakh during the relevant FY.
Even if you are based in the UK, the professional income from India will be taxable in India as the income is sourced from India.
Thus, for FY23 and onwards, once you are based in the UK and come on a visit to India, as an OCI cardholder, you will need to first calculate the quantum of India-sourced income and then your physical presence in India as per the scenarios mentioned above, to qualify as an NR in India.
Sonu Iyer is tax partner and people advisory services leader, EY India.
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