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Money gifted to your wife won’t be taxable


I’ve been working within the US for the previous six years. In Could, I got here to India for private causes. I proceed to work for a US firm (on US initiatives) remotely from India. I proceed to obtain wage in {dollars} in my US account. I’m unsure when (or if in any respect) I’ll return to the US. My understanding is that from December, I’ll qualify as an RNOR and need to file returns in India. Would my US wage be thought-about India-sourced earnings, and would I’ve to pay taxes in India on this wage?

—Identify withheld on request

 

To search out out whether or not your earnings shall be taxed in India, you want to set up your residential standing as per the I-T Act of India for the related monetary yr (FY). Be aware that this standing could change yr after yr and due to this fact it must be decided for each FY. You possibly can check your residential standing within the following method.

Situations: a) you might be in India for 182 days or extra within the FY; or b) you might be in India for 60 days or extra within the FY and three hundred and sixty five days or extra within the 4 FYs instantly previous the related FY. Extra circumstances: You’re resident in India in two of the ten FYs instantly previous the related FY; and you might be in India within the seven years instantly previous the related FY for 729 days or extra.

For those who meet any of the primary set of circumstances and each the extra circumstances, you shall be thought-about a resident in India. For those who meet any of the primary circumstances however don’t meet the extra circumstances, you shall be thought-about a resident however not ordinarily resident (RNOR) in India. If you don’t meet any of the primary circumstances, you shall be a non-resident in India. As long as you’re a non-resident or RNOR in India, the earnings that’s earned and obtained by you exterior India shall not be topic to tax in India.

I’m an NRI staying within the UAE for greater than 10 years. I switch my financial savings to an NRI account in India. Each month, I switch a set quantity to a joint account that I maintain with my spouse. My spouse has no earnings of her personal. Will any earnings tax be levied on this financial savings account?

—Identify withheld on request

 

The cash gifted to your spouse won’t be topic to tax in India as she is a specified relative as per the I-T Act. The cash obtained by her shall not be taxable in your or her fingers. In case she invests this cash and an earnings is earned from it, there could also be tax implications for you.

Archit Gupta is founder and chief government, ClearTax.

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