159. Double taxation in India

for NRIs

Q: British retired/pensioner British Citizen with OCI card goes to India every year for about 180 days to escape from British winter. Can he/how can he avoid DTC by Double Taxation Treaty between India & UK? Does he need, a certificate of tax residence is obtained by him from the tax authority of the overseas country in a prescribed form. Following is from few days back Economic Times - India Times. Moreover, proposed DTC specifically provides that a non-resident shall not be entitled to claim relief under the provisions of the relevant tax treaty, unless, a certificate of tax residence is obtained by him from the tax authority of the overseas country in a prescribed form. While this certificate is practically required under the current provisions also (if the case was picked up for assessments); in the proposed DTC the same will become a mandatory requirement. In summary, a word of caution for NRIs - (be) aware of the provisions of proposed DTC and be learned so as to plan accordingly in advance before 1 April 2012. A. Certificate of tax residence is not going to be a new requirement as even now it is required under current laws if a case was to be picked up for assessment. Only change would be that this certificate would become mandatory with the proposed DTC expected to come into effect from April 1, 2012. The Economic Times article you quote is probably the one by Rohit Bothra of Ernst & Young. His article also states: A resident would be eligible to claim exemption of income accruing to him/her outside India, from a source other than a business controlled in or a profession set up in India, if the resident: 1. Has been a non-resident in India in nine out of ten preceding financial years; or 2. Has been in India for less than 730 days, during the seven preceding financial years Thus, NRIs who become resident of India may not be required to pay tax on their global income, if they satisfy any of the above mentioned conditions. Those who require a certificate of residence in UK can get them from the tax office where they file their income tax returns. In the United States to get a certificate of residence, form 8802 has to be submitted. A link to form 8802 is provided HERE I believe PIOs who are retired and have no business interest in India would not have any major problems with the new tax code proposals. The most severely hit would be NRI businessmen who continue to have business interests in India while living abroad and are frequent visitors to India due to their business. PIOs who spend a lot of time in India, perhaps should consult with a qualified tax consultant to plan ahead to minimize any tax impact of the new proposals.