My son aged 32 years working in Saudi Arabia. Should he pay tax in India

Ans: Hi Mehul
A HUF cannot claim the benefit of rebate under section 87A with the enhanced limit of Rs. 7 Lakhs hence based on the tax saving investments of the HUF, the relevant tax (if applicable) would be levied

Ans: Non resident is liable to file ITR in India if income is more than exemption limit.

Further, an individual has to file his ITR irrespective of their income level, for cases like :

- If an individual has deposited more than Rs 1 crore or Rs 50 lakh in one or more current and savings bank accounts, respectively.
- If an individual has incurred an expenditure exceeding Rs 2 lakh for himself or any other person for foreign travel.
- Has incurred an expenditure exceeding Rs 1 lakh toward electricity payment in a year.
- Is a beneficial owner or beneficiary of any asset outside India.
- Is a signatory to a foreign bank account.

Ans: Your tax residency status in India depends on the number of days you stayed in India during the financial year (April to March). For the financial year 2023-24, you need to check your residency status based on the following criteria:

Resident: If you stayed in India for 182 days or more during the financial year.
Non-Resident Indian (NRI): If you stayed in India for less than 182 days during the financial year.
Since you were in Saudi Arabia for most of the financial year and returned to India in mid-September, you are likely to qualify as an NRI, provided your stay in India does not exceed 182 days.

Taxability of Income Earned Abroad
For NRIs
Foreign Income: Income earned and received outside India is not taxable in India.
Indian Income: Income earned or received in India is taxable in India.
If you qualify as an NRI, your income earned in Saudi Arabia is not taxable in India, regardless of whether it was credited to your NRE account or remitted via MoneyGram.

For Residents
Global Income: If you are considered a resident, your global income is taxable in India.
Tax Rate: The tax rates for individuals are progressive, ranging from 5% to 30% based on your income slab.
Determining Tax Liability
Calculate Days in India
Arrival and Departure Dates: Track the exact dates you were in India during the financial year.
Total Days: Ensure your stay does not exceed 182 days to qualify as an NRI.
Tax Calculation for Residents
Income Slabs: For the financial year 2023-24, the income tax slabs for residents below 60 years are:
Up to Rs. 2.5 lakhs: Nil
Rs. 2.5 lakhs to Rs. 5 lakhs: 5%
Rs. 5 lakhs to Rs. 10 lakhs: 20%
Above Rs. 10 lakhs: 30%
Income from Saudi Arabia: Add your Saudi income to your total income in India.
Deductions and Exemptions: Utilize available deductions like Section 80C, 80D, etc.
Steps to Ensure Compliance
Track Residency: Accurately track your days in India for precise residency status.
Document Remittances: Maintain records of all remittances received via MoneyGram.
Consult a Certified Financial Planner: For personalized advice, consult a CFP to ensure compliance and optimize tax liability.
Summary
NRI Status: If you stayed in India for less than 182 days, your Saudi income is not taxable.
Resident Status: If you stayed for 182 days or more, your global income, including Saudi earnings, is taxable in India.
Tax Rates: For residents, the tax rate ranges from 5% to 30% based on your income.
Ensuring accurate residency status is key to determining your tax liability. Consulting a CFP will help you navigate this complex situation effectively.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in