Deputed overseas in 2011-2012? Tips for filing India tax returns

If you left India in 2011-2012 to serve a stint at an offshore location, you are probably wondering if you need to file your tax returns in India which are due by July 31 2012. Ramesh Murthy faces a similar dilemma. Ramesh is a 27 year old software engineer, currently working in Detroit on an H1B visa.

From April 2011 to October 2011, he had an income of Rs 8 lakh earned as salary in India of which tax deducted at source was Rs 80,000. After that from November 2011 to December 2011, he earned a US salary since he was posted to the US subsidiary of his Indian company. His total US income for this period, as per the W2 was USD 25,600 and federal tax withheld was USD 3,500. He is not a US citizen or a Green Card Holder.

How can Ramesh ascertain if he must file tax returns in India by the due date of July 31, 2012?

Step 1: Find out resident status

The first thing to do is find out your status - were you a resident or a non-resident Indian in 2011-2012.

To find out if you were a resident of India in 2011-2012, you must meet one of the following basic conditions:

i) you were in India in that year for period amounting in all to 182 days or more, or

ii) You have within the four years preceding that year been in India for a period amounting in all to 365 days or more, and have been in India for 60 days or more in that year. This 60 day period is increased to 182 days in case of citizens of India who leave India for purposes of employment outside India, and for a person of Indian origin who comes on a visit to India

In addition to the basic condition above, a person qualifies as Resident and Ordinarily Resident (ROR) in India if he satisfies both of the following additional conditions:

i) He has been resident in India in at least 2 out of 10 years (according to the basic conditions noted above) preceding the relevant tax year; and

ii) He has been in India for a period of 730 days or more during 7 years preceding the relevant tax year.

"In brief it can be said that an individual qualifies as an ROR in India if he satisfies at least one of the basic conditions and both the additional conditions. Ramesh was in India during the period April to October 2011, that is, for 214 days. He was a resident in India in 2 out of the preceding 10 years and his stay in the preceding 7 years exceeded 730 days and accordingly he qualifies as a ROR for the tax year 2011-12. Ramesh hence, qualifies as a resident India for 2011-2012," explains Vineet Agarwal, Director, KPMG India.

Source: http://economictimes.feedsportal.com/fy/8av2Fvy0bItUW2eo/story01.htm

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