252. Double taxation for UK citizens can be avoided
Q: Dear Sir, I want to know how a UK citizen & OCI(overseas citizen of India) residing in India permanently for employment treated with regards to 1)Indian tax on UK house rent 2)Indian wealth/capital gains tax when UK house sold 2)retaining NRE/NRO accounts in India 3)Time limit on bringing cash deposits in to India Thanks, A. Anyone who returns to India after nine or more years of being a non resident will become RNOR (Resident but Not Ordinary Resident) for 2 years. An RNOR is normally not required pay tax in India on their foreign income. When RNOR status expires they would be liable to pay tax on their foreign income in India, However as both countries, India as well as UK have signed Double Taxation Avoidance Agreement between them you should be protected. Kindly note that as a UK citizen you may be required to pay tax on income in India unless you have taken steps to adjust your UK residency for tax purposes to avoid being taxed on foreign income. Residency for tax purposes determines your tax liability in UK. Those who are deemed have UK residence for tax purposes are normally liable to be taxed on all worldwide income. They are required to pay tax on income which arises in the UK as well as income which arises outside the UK. To avoid paying taxes on your worldwide income in UK, all social and family ties with the UK need to be severed. If you are not domiciled in the UK and/or not ordinarily resident in the UK you may be required to pay UK tax ONLY on the amount of your foreign income that you remit to the UK. You will still have to pay UK tax on any of your income and gains which arise/accrue in the UK. UK residents who return to India for long term settlement should fill out Form P85 as the first step to let the tax authorities know they are leaving UK. A link to Form P85 is provided HERE. It is necessary to sever all links to UK specially in the first year of non residency so that you are not deemed to be a UK resident for tax purposes. As for bank accounts held in India, NRO accounts can be converted to regular Indian bank accounts and normally funds from NRE accounts can be deposited in a RFC account.
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252. Double taxation for UK
citizens can be avoided
Q: Dear Sir, I want to know how a UK citizen & OCI(overseas citizen of India) residing in India permanently for employment treated with regards to 1)Indian tax on UK house rent 2)Indian wealth/capital gains tax when UK house sold 2)retaining NRE/NRO accounts in India 3)Time limit on bringing cash deposits in to India Thanks, A. Anyone who returns to India after nine or more years of being a non resident will become RNOR (Resident but Not Ordinary Resident) for 2 years. An RNOR is normally not required pay tax in India on their foreign income. When RNOR status expires they would be liable to pay tax on their foreign income in India, However as both countries, India as well as UK have signed Double Taxation Avoidance Agreement between them you should be protected. Kindly note that as a UK citizen you may be required to pay tax on income in India unless you have taken steps to adjust your UK residency for tax purposes to avoid being taxed on foreign income. Residency for tax purposes determines your tax liability in UK. Those who are deemed have UK residence for tax purposes are normally liable to be taxed on all worldwide income. They are required to pay tax on income which arises in the UK as well as income which arises outside the UK. To avoid paying taxes on your worldwide income in UK, all social and family ties with the UK need to be severed. If you are not domiciled in the UK and/or not ordinarily resident in the UK you may be required to pay UK tax ONLY on the amount of your foreign income that you remit to the UK. You will still have to pay UK tax on any of your income and gains which arise/accrue in the UK. UK residents who return to India for long term settlement should fill out Form P85 as the first step to let the tax authorities know they are leaving UK. A link to Form P85 is provided HERE. It is necessary to sever all links to UK specially in the first year of non residency so that you are not deemed to be a UK resident for tax purposes. As for bank accounts held in India, NRO accounts can be converted to regular Indian bank accounts and normally funds from NRE accounts can be deposited in a RFC account.
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