Tax Column

I am an individual and of Indian origin but a citizen of US. For the current financial year 2023-24, I have stayed more than 182 days in India and likely to stay further till March 2024. I was a nonresident for almost the last 10 to 15 years. What would be my residential status for tax purpose in India for the current financial year? Will there be any impact on my NRE account?

Under Section 6(1) of the Income Tax Act, an individual is said to be a resident in India in any previous year if he has been in India in that year for a period amounting to 182 days or more. Since you have already spent more than 182 days in the current financial year and likely to stay further, you will be considered resident in India for the current financial year 2023-24. However, since you were a non-resident over the previous 10 years, for tax purpose you will be considered as ‘resident but not ordinary resident’. Accordingly, your foreign income will not be taxed in India for the current financial year. However, if you continue to stay in India for more than 182 days in the next financial year, then your global income would be taxed from the financial year 2024-25. Since you are a US’ citizen but of Indian origin, you can continue to hold your NRE account in India and can deposit remittance in foreign exchange.