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Tax issues for individuals travelling abroad

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Taxability in India is based on an individual’s residential status. As per the Indian Income Tax Act, 1961, an individual may be an Ordinary Resident (OR), Non Resident (NR) or Not Ordinarily Resident (NOR) based on the number of days of physical presence in India.

The residency rule is liberal for Indian citizens leaving India for taking up employment outside the country and is triggered only if the individual spends more than 182 days in India in the year of departure. However, in the year of return, the 60 days rule shall be applied for determining residential status.

A NR and NOR is taxable only on India-sourced income or income received in India. However, an OR is taxable on worldwide income in India. So, if an individual leaves India for the purpose of taking up employment abroad but still continues to be an OR in a particular year, he shall be taxable on income earned in India and outside the country, irrespective of where he renders his services or receives salary.

NRI returning to India? How to calculate your tax

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The grass is not really greener on the other side as many Indians abroad are figuring it out the hard way. Faced with a gloomy economy and career prospects, some are packing their bags and heading back to test the job market.

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