My daughter studying in Germany was outside India in 2022-24 for more than 182 days. She has income from there from parttime job and paid Internship. In India she has Income share investment capital gain and dividend. How she will be taxed. Should I change 3in 1 Saving bank account.

Ans: NRIs cannot file return of income in Form ITR-1. If an NRI has income from business or profession then return is required to be filed in Form ITR-3. In all other cases, ITR-2 can be used to file return of income.

Ans: An NRI with Gross Total Income less than the taxable income limit need not file income tax return. However, if your daughter has any of the below, one would need to file returns irrespective of one's Total Income being less than the Basic Exemption limit:

• Income from Short Term Capital Gains on equity shares or units of equity oriented mutual fund
• Income from Long Term Capital Gains, which are chargeable to tax

Ans: Dear Shailendra,

As your daughter was outside India for more than 182 days during the financial year 2022-23, she would be considered a Non-Resident Indian (NRI) for tax purposes. I'll outline the tax implications for her below.

Income earned in Germany: As an NRI, your daughter will not be taxed in India for the income she earned in Germany through her part-time job and paid internship. She will need to pay taxes on this income according to the tax laws in Germany.
Income from share investments, mutual funds, and dividends in India: As an NRI, your daughter will only be taxed on her income that is earned or accrued in India. This includes:
Short-term capital gains on equity shares and equity-oriented mutual funds: These will be taxed at a rate of 15%.
Long-term capital gains on equity shares and equity-oriented mutual funds: Gains exceeding ₹1 lakh will be taxed at a rate of 10%.
Short-term and long-term capital gains on non-equity investments (e.g., debt mutual funds) will be taxed as per the applicable slab rates for NRIs.
Dividends: Dividends received from Indian companies will be subject to tax deduction at source (TDS) at a rate of 20% (plus applicable cess and surcharge).
Regarding your query about changing her 3-in-1 savings bank account with ICICI Direct, it is advisable to inform the bank about her change in residential status and convert the account into an NRO (Non-Resident Ordinary) account. This will help in managing the tax compliance for her investments in India.

Please note that the Double Taxation Avoidance Agreement (DTAA) between India and Germany may provide relief from being taxed on the same income in both countries. Your daughter should consult a tax professional in Germany to understand the applicable provisions and claim any benefits available under the DTAA.

I hope this information helps.

Best regards

Ans: Here's how to determine your daughter's residential status for Income Tax (AY 2023-24), Bank, Demat account, and income from investments based on the information provided:

Income Tax Residential Status:

For Assessment Year (AY) 2023-24, your daughter's residential status will likely be Non-Resident (NR).

Here's why:

• She left India for studies in June 2020, indicating she might not have met the physical presence criteria in India during the relevant financial years (FY).

To be considered a resident for tax purposes in India, an individual needs to meet at least one of the following conditions:

• Stay in India for 182 days or more in the relevant financial year (FY 2022-23).
• Stay in India for at least 60 days in the relevant financial year AND for 365 days or more during the four preceding financial years (unlikely in this case since she left in 2020).

Important Note:

It's important to consider the entire period from June 2020 to March 2023 (covering FY 21-22, FY 22-23) to determine the residential status definitively.

Recommendation:

For a more precise assessment, it's advisable to consult a tax professional as they can consider all aspects of your daughter's situation, including:

• Exact number of days spent in India during FY 21-22.
• Nature and source of her income (if any) from investments.
• Any tax residency certificate she might have obtained in Germany.

Bank and Demat Account:

• Bank: Many banks might categorise your daughter as a Non-Resident (NR) based on her stay in India.
• Demat: Similar to the bank, the Demat account might also be categorised as non-resident if it aligns with her tax residency status.

Income from Investments:

• Tax implications on income from investments (e.g., dividends, interest) will depend on the type of investment, the source (India or abroad), and the tax treaty (if any) between India and Germany.

Further Resources:

Income Tax Department - Non-Resident Individual for AY 2023-2024: https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-0

Remember, this is a general overview, and consulting a tax professional is highly recommended for specific advice tailored to your daughter's situation.