I am a non-resident Indian working in Gaborone, Botswana, since January this year. This is the first time I have accepted an assignment outside India. My employers are deducting tax from my salary every month and paying it to the Botswana government.

I am told that I don’t need to file my income tax return in India as I shall be submitting my tax form in Botswana, as long as I live here.

Is it right if an NRI just files her return in the country where she works and earns? I get income from PPF and the like, in India. This income from other sources is well within the taxable amount. Kindly guide me on whether I should file return in India for 2015-16?

T Vijayalakshmi

According to the provisions of the Income Tax Act, 1961, an assessee can either be a resident and ordinary resident, a resident but not ordinarily resident or a non-resident, based on his physical presence in India during a particular financial year (FY) and past 10 years.

Further, based on the said residential status, he shall either be taxable on his global income or income sourced/received from India.

Based on the limited facts, I understand that your stay in India during FY15-16 is more than 181 days and assuming that you were in India over the past 10 years, you would qualify as resident and ordinarily resident during FY15-16.

Hence, you would be taxable on your worldwide income in India for FY15-16, including the income that you earned by rendering services in Gaborone, Botswana. You may claim the credit of the tax paid overseas, subject to specified conditions.

The provisions of the Double Taxation Avoidance Agreement will also have to be analysed separately to determine if any benefit is available for the income that is taxed both in India and Botswana.

I understand that your total income (including that earned in Gaborone, Botswana) during FY15-16, is more than the maximum amount not chargeable to tax. Accordingly, you are required to file your tax return in India for FY15-16.

For FY16-17 onwards, given that you will remain outside India for employment, you shall qualify as a non-resident in India, and accordingly, only income sourced from India and income received/deemed to be received in India will be taxed in India.

In such a case, if your total income is below the prescribed threshold limit not chargeable to tax, you are not mandatorily required to file your India tax return.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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