I am a pilot with plans to shift base to Singapore, Hong Kong or South Korea. I will be working for more than 183 days a year in one of those countries from this year.

Will my income be taxable in both India and that country? Will I get any benefits under double taxation avoidance agreements ?

Gaurav Punia

As per the Income-tax Act, 1961, an individual is termed a ‘resident’ if he has stayed in India for 182 days or more in the current financial year (FY), or has stayed in India for 60 days or more in the current FY and 365 days or more in the preceding four FYs.

The 60 days as per the second condition is replaced by 182 days when an Indian citizen goes abroad for employment.

I understand that you are going outside India for employment and your physical stay in India in FY18 shall be less than 182 days. Thus, you shall qualify as a non-resident in India and be taxed only in respect of the incomes earned/received in India, as per the applicable slab rates.

As only the India-sourced incomes are subject to tax here, double taxation will not arise.

However, in case any income is doubly taxed, you may claim the credit of the taxes paid in one country against the tax liability of another country or exclusion of income depending upon the provisions of the relevant Double Tax Avoidance Agreement or the provisions of the Act, as applicable in your case.

In FY17, I had traded in F&O (futures and options) and suffered some loss and now I don’t want to continue with trading.

Can I use Form ITR 1 instead of ITR 4, since I don’t want to carry forward my losses and pay additional charges in maintaining the book and getting it audited by a CA?

Raj Kishore

The income from F&O transactions may be classified as business income or capital gains depending on the circumstances — such as the frequency of transactions, holding period, volume of transactions and motive behind the transactions.

I presume that in the past, you considered the income from F&O as business income.

As per the notified IT return forms for FY17, an individual running a business or practising a profession (ie, making business income/loss) is required to file his tax return in Form ITR-3 (and not ITR-4, as was the scenario last year).

Since you were trading in F&O in FY17, you shall be required to file your tax return in Form ITR-3.

Further, books of accounts are required to be maintained by a person running a business only where the turnover exceeds specified limits.

If your turnover exceeded ₹10 lakh in any of the three years immediately preceding FY17, or if it is your first year of business and your turnover is likely to exceed ₹10 lakh, then you are required to maintain the book of accounts.

Further, in case your turnover exceeds ₹1 crore, you are required to get the book of accounts audited by a CA.

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

Related Topics