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Is Saudi income earned during residency taxed in India?

Ramalingam

Ramalingam Kalirajan  |7101 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 17, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
masthan Question by masthan on Jul 12, 2024Hindi
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Hi Sir, I went to Saudi employment in Dec 2022, got residency( iqama) there due to medical issues, and returned to India from June to Aug vacation and medical treatment purposes, due to health recovery will take a long time, so for resignation and exit purposes I went to Saudi and finally I got an exit visa on sep mid returned to India, now am I taxable in India for income earned by employment at Saudi, and that income not directly credited on my NRE account, I was made remittance bt money gram if need to pay tax as per Indian resident status how much % to pay

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
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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T S Khurana

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Asked by Anonymous - May 11, 2024Hindi
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Can you please suggest on capital gains as per Indian taxation laws arising in the below two queries : 1) property purchased with joint ownership, me and my wife’s name in 2015 at a cost of 64,80,000, housing improvements done for the cost of 1000000 and brokerages of 200000 paid and sold the same property at 10000000 in Dec 2023? 2) 87% of the proceeds got from the deal i.e 8700000, have been reinvested to pay 25% amount in purchasing another joint ownership property in Dec 2023, 3) I have invested in another under construction property in Nov 2023 by taking housing loan, which is on me and my wife’s name worth 1.4 cr, here the primary applicant is me only while wife is just made a Co applicant in the builder buyer agreement and also on the housing loan . So what are the LTCG tax liabilities arising from the above 3 scenarios for FY 2023-2024 and FY 2024-2025. I intend to sale off the property acquired in (2) by Dec 2024 and use that proceeds to close the housing loan for the property acquired in (3), will this sale of property be inviting any tax liabilities if the complete proceeds received from the sale of the property in (2) would be utilised to close the housing loan taken in Nov 2023 for the property in (3) ? Since in FY 23-24, I would be claiming the LTCG from the sale proceeds of 1) invested in the purchase of property in 2), and I intend to sale off this property in Dec 2024, will the LTCG claim be forfeited on the property sale in (1), should I hold this property at least for further 1 year so that sale of this property in 2) will not invite STCG?
Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
Most welcome for any further clarifications. Thanks.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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