I was an NRI from 2005 until December 3rd,2018. Total stay in India every year from 2005 to 2018.. Average 30 days max. Questions 1.)Until when can I stay an RNOR with relates to my tax filing Financial year in India? 2.)Is my RFC USD remittances completely tax free until I am an RNOR? Thanks
1. Looking at the information given by you, it appears that you can be RNOR till FY 2020-21. However, its advisable to have a detailed analysis of each and every condition mentioned for RNOR. it's a little complex thing.
2. What do you mean by RFC USD remittances? Please specify the nature of remittance.
From the limited information available I think 2020-21 would be your last year as RNOR. From 2021-22 you will be a ordinary resident.
What is RFC USD remittance?
Till you are RNOR your Indian income is taxable or income earned from businesses operated from India.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
RFC Stands for Resident Foreign Currency Account ( RFC) that is established by an NRI who returns back to India(if he has overseas remittances pending to come post his return) .An NRE account cannot be maintained after he returns for good,thus the RFC Account which is established either in USD or EUR
You will be RNOR till FY 2021-22. Yes, remittances will be tax free till you are RNOR.
Hi
For the purpose of income tax in India, the income tax laws in India classifies taxable persons as:
a. A resident
b. A resident not ordinarily resident (RNOR)
c. A non-resident (NR)
The taxability differs for each of the above categories of taxpayers. Before we get into taxability, let us first understand how a taxpayer becomes a resident, an RNOR or an NR.
A taxpayer would qualify as a resident of India if he satisfies one of the following 2 conditions :
1. Stay in India for a year is 182 days or more or
2. Stay in India for the immediately 4 preceding years is 365 days or more and 60 days or more in the relevant financial year
In the event an individual who is a citizen of India leaves India for employment during an FY, he will qualify as a resident of India only if he stays in India for 182 days or more. Such individuals are allowed a longer time greater than 60 days and less than 182 days to stay in India. However, from the financial year 2020-21, the period is reduced to 120 days or more for such an individual whose total income (other than foreign sources) exceeds Rs 15 lakh.
In another significant amendment from FY 2020-21, an individual who is a citizen of India who is not liable to tax in any other country will be deemed to be a resident in India. The condition for deemed residential status applies only if the total income (other than foreign sources) exceeds Rs 15 lakh and nil tax liability in other countries or territories by reason of his domicile or residence or any other criteria of similar nature.
If an individual qualifies as a resident, the next step is to determine if he/she is a Resident ordinarily resident (ROR) or an RNOR. He will be a ROR if he meets both of the following conditions:
1. Has been a resident of India in at least 2 out of 10 years immediately previous years and
2. Has stayed in India for at least 730 days in 7 immediately preceding years
Therefore, if any individual fails to satisfy even one of the above conditions, he would be an RNOR.
From FY 2020-21, a citizen of India or a person of Indian origin who leaves India for employment outside India during the year will be a resident and ordinarily resident if he stays in India for an aggregate period of 182 days or more. However, this condition will apply only if his total income (other than foreign sources) exceeds Rs 15 lakh.
Also, a citizen of India who is deemed to be a resident in India (w.e.f FY 2020-21) will be a resident and ordinarily resident in India.
NOTE: Income from foreign sources means income which accrues or arises outside India (except income derived from a business controlled in India or profession set up in India).
An individual satisfying neither of the conditions stated in (a) or (b) above would be an NR for the year.
Resident: A resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.
NR and RNOR: Their tax liability in India is restricted to the income they earn in India. They need not pay any tax in India on their foreign income.
1.In your case Till 2020_21 your residence status will be RNOR.
2 Yes
Dear Sir.
Hope you are doing well !!
-Yes, you will be treated as RNOR for FY 2021-22.
-Yes, it would be tax free.
Hello,
As per the information provided, you would be considered RNOR till F.Y. 2020-21. And, foreign remittances would be tax free till your status is RNOR.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
As soon as a person becomes a resident, whether ordinary or not ordinary resident, NRE/NRO accounts have to be converted to resident accounts.
A RNOR can open RFC account, interest on which shall not be taxable.
Yes the amount received in such account would be tax free.
It could be tax free even after you become resident if you can prove it was earned before you became resident and is received now.
Yes, it would be tax free.
Hi
Yes it is not taxable.
For detail discussion please have a phone consultation.