OCI working in India - tax treatment

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Overseas Citizens of India (OCI), or Foreign Citizens and who are residents of India for more than 182 days have to pay tax and file income tax return in India. The income tax filing is usually based on his/her global income and is subject to the conditions of DTAA (Double Tax Avoidance Agreement).

In case of OCI, who have lived for less than 182 days (in any financial year in India), will have to pay tax and file income tax return only on the income earned in India.

Please note that you need to pay taxes only on the income earned in India & claim the credit of taxes paid in US income while filing ITR in India.

We may assist you in entire procedure.

It is advisable to take a phone consultation for detailed discussion.

As mentioned above you are an OCI and not POI. Taxation is different for OCI & POI.

OCI, who have lived for less than 182 days (in any financial year in India), will be regarded as a Non-residents. Non-residents have to pay taxes and file income tax returns only on the income earned in India. Your stay in FY 2021-22 is approximately 128 days and hence you are a non-resident. 

For the FY 2021-22, you will be liable to file Income Tax Return and pay taxes in India on the income earned from the Indian entity received in India. 

You will not be liable to pay income tax on the US earnings in FY 2021-22.  If this amount is also taxable in the USA, you can take the benefit of DTAA and avoid paying tax in both countries. 

Yes, if your employer has deducted any extra TDS(mentioned in Form 16), you get your excess tax as a refund when filing the income tax return. 

For the FY 2021-22, 31st July 2022 is the due date for filing of Income Tax Return in case of individuals with no audit cases. 

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As per Income tax rules you will be considered as Non-resident assuming you were not in India for 365 days or more in past 4 years.

Hence, if your employer has deducted more TDS you can claim refund when you file your Income tax return for the year.

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- Tax incidence depends on the residential status of a person. In F.Y. 2021-22, your stay in India was 129 days. One of the basic condition to become resident in India is a person should be in India for 60 days or more in a previous year and 365 days or more during 4 years preceding the previous year. As you have not shared details of your stay in India for last ten years preceding the previous year (FY 2021-22) therefore assuming NIL no. of days of your stay in India during such 10 years. On the basis of such assumption you will be NR in FY 2021-22. NR is only liable to pay tax on Indian Income and not on Foreign Income. RNOR is also liable to pay tax on Indian and on foreign income from business or prfoession controlled from India.

- In India ITR is filed on financial year basis and in US it is calendar year. As you are a US citizen you would be treated as ROR in US and liable to pay tax on global income including Indian income subject to DTAA. 

- Form 16 will only contain details of income earned in India. Any excess TDS deducted you will get refund after filing of the ITR.

For detailed discussion you may opt for phone consultation. I will assist you in filing ITR.

If you have stayed in India for more than 182 days you would be resident. However, if you were non-resident in 9/10 PYs preceding the current PY and have stayed in India for less than 729 days in 7 past PYs, you would be RNOR. In that case only your Indian sourced income should be taxed. If you are citizen of US, US would also tax your Indian income. You can file the tax return in India and claim the refund of taxes wrongly deducted on your US income. 

You may file your return with correct status and claim refund. I also suggest that you may advise your employer to change your status for proper tax deduction henceforth. 

Yes for the year 2021 you need to file return in USA, once you declare income and tax there under DTAA we can claim the excess amount deducted as refund back