Q631. NRI Returning to India - Tax liabilities in India on return . . .

Question: I am going to be 60 years old and considering to return to india but at the same time want to retain Canadian citizenship

and live in india as OCI card holder. I will not be working or have ant other income in India and Canada apart from little bit of Bank

interest in both the countries

My questions are as below :

1 Shall I live in India as “ deemed non-resident “ and file income tax return each year

OR

As a “ non resident for income tax purposes”

2 I have RRSP contribution in Canadian bank , If I withdraw some amount each year, while in India, Would I end up paying more

taxes in comparison to living in Canada . The taxes could be for both Canada and India.

Your advice shall be highly appreciated

Regards

Kumar

Answer: After moving to India, you will not be taxed on your foreign income for a few years. When you initially return to India, you would not become a resident for taxation purposes in India until one of the following conditions apply to you: 1. You have lived in India for 182 days or more during previous* taxation year OR 2. Have been in India for 60 days or more during previous year and 365 days or more during 4 preceding previous years. If either of the two conditions mentioned above are applicable to you, then you will be considered to be a resident, your Canadian income would still not be taxable in India as long as neither of the two conditions shown below apply to you: 1. You have been resident in India in at least 9 out of 10 previous years preceding the previous year AND 2. Stayed in India for 730 days or more during 7 years. preceding the previous year. As long as any of the above two conditions are not applicable to you, your status in India will be classified as Resident but not ordinarily resident (RNOR). Those who have RNOR status are taxable in India only on their Indian income and their foreign income is exempt from Indian taxes.

HOW TO AVOID PAYING TAXES IN INDIA LEGALLY

Currently India allows senior citizens (over 60 years of age) tax free earnings of up-to Rupees 2,50,000 which works out to about Canadian $4300. If you plan the withdrawals of funds from your Canadian RRSP plan, you may have no tax liabilities in India or for that matter even in Canada. For instance, you could withdraw any amount you wish to from your Canada RRSP plan as long as you have RNOR status and the money will not be taxable in India. After you lose RNOR status, you could limit your withdrawals to the yearly tax free income allowed by India and thereby pay no taxes in India. *Note: ‘Assessment Year’ means the year for which taxes apply. The Assessment year in India is the 12 month period starting from April 1st to March 31st. Previous Year refers to the Financial Year preceding the Assessment Year.

Exemption for NRI, OCI & PIO seniors

The Indian income tax rules do not allow non-residents, oci holders or pio’s to take advantage of the higher tax exemption based on age as is available to senior citizens in India. Non-residents tax exemption is only the basic exemption regardless of the individuals age.

Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com

NriInformation Questions &Answers

Read Disclaimer at bottom of page

NRI - OCI - PIO Guide & Information

Q631. NRI Returning to India - Tax

liabilities in India on return . . .

Question: I am going to be 60 years old and considering to return to india but at the same time want to retain Canadian citizenship and live in india as OCI card holder. I will not be working or have ant other income in India and Canada apart from little bit of Bank interest in both the countries My questions are as below : 1 Shall I live in India as “ deemed non-resident “ and file income tax return each year OR As a “ non resident for income tax purposes” 2 I have RRSP contribution in Canadian bank , If I withdraw some amount each year, while in India, Would I end up paying more taxes in comparison to living in Canada . The taxes could be for both Canada and India. Your advice shall be highly appreciated Regards Kumar Answer: After moving to India, you will not be taxed on your foreign income for a few years. When you initially return to India, you would not become a resident for taxation purposes in India until one of the following conditions apply to you: 1. You have lived in India for 182 days or more during previous* taxation year OR 2. Have been in India for 60 days or more during previous year and 365 days or more during 4 preceding previous years. If either of the two conditions mentioned above are applicable to you, then you will be considered to be a resident, your Canadian income would still not be taxable in India as long as neither of the two conditions shown below apply to you: 1. You have been resident in India in at least 9 out of 10 previous years preceding the previous year AND 2. Stayed in India for 730 days or more during 7 years. preceding the previous year. As long as any of the above two conditions are not applicable to you, your status in India will be classified as Resident but not ordinarily resident (RNOR). Those who have RNOR status are taxable in India only on their Indian income and their foreign income is exempt from Indian taxes.

HOW TO AVOID PAYING TAXES IN INDIA

LEGALLY

Exemption for NRI, OCI & PIO seniors

The Indian income tax rules do not allow non- residents, oci holders or pio’s to take advantage of the higher tax exemption based on age as is available to senior citizens in India. Non-residents tax exemption is only the basic exemption regardless of the individuals age.

RI Information

Informing educating and connecting Indians across the globe

NriInformation FAQ

Read Disclaimer at bottom of page