Does she have to declare her foreign earned income in her tax return in India for A.Y. 2020-21? She has paid taxes in foreign country with which India does not have DTAA.-

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: The income which is earned or accrued in India is taxable in India. If the residency status is ‘Non Resident’ income, which is earned outside India, is not taxable in India.

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