The Hindu Business Line : Bridging the tax gulf

He is in India for 60 days (182 days if he leaves India to take up employment outside India if he is a citizen of India or being outside India comes to India on visit if he is a citizen of India or a person of Indian origin) or more in the previous year and for 365 days or more in the four years preceding the previous year.

He is resident but not ordinarily resident if he satisfies any of the following conditions:

He is non-resident in the nine out of the 10 years preceding the previous year

He is in India for 729 days or less in the seven years preceding the previous year

An individual is resident and ordinarily resident if he does not satisfy both the immediately preceding two conditions.

An individual who is not a resident would be a non-resident.

Case in question

In your relative's case you have stated that he has travelled outside only on deputation and not to take up employment outside India.

Therefore, the question of falling into the exception would not arise.

This would mean that irrespective of his coming to India for about 5 or 6 days in the current year, he would be a resident and ordinarily resident in India since he has been in India for 60 days or more in the previous year and 365 days or more in the four years preceding the previous year.

This is taken on the basis that he has left India only on September 27, 2005.

Assessing tax

It is assumed that before this date he was in India.

The salary earned in Saudi Arabia will therefore be taxable in India since in the case of a resident and ordinarily resident the world income will be taxable in India.

There is no double taxation avoidance agreement between India and Saudi Arabia.

Your relative may consider taking the benefit of Section 91 of the Act.

Under this Section, if any person who is resident in India in any previous year establishes that he has paid income tax by deduction or otherwise, in any country in respect of his income which accrued or arose outside India, he shall be entitled to the deduction from the Indian income tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or at the rate of tax of the said country, whichever is lower.

Where the tax rates are equal, the Indian rate shall apply. This relief is available only if there does not exist an agreement under Section 90 between India and the country in which the income accrues.

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