OCI returned to India but have part time job abroad - ? NRE FDs

chak75 · Post by **chak75** » Wed Aug 29, 2018 9:28 pm

Hi,
I looked for answer to this question but couldn't get one.
I have been an active member till 2015 when this forum helped me make my mind up for R2I. I wrote my story here as well.
Now I need your help again....

I am OCI and British Citizen. I kept my savings in NRE FDs and had RNOR status for the last 3 years. However, I have taken up a part time employment in UK in May 2017 where I stay for around 60-70 days total a year in 5 divided stints. I have been paying my IT in India on my income in India which were coming in my resident accounts which are joint with my wife ( she is the first holder ). I have been paying UK tax as per UK earning.

My idea was that I will close these NRE accounts after RNOR period is over, but when I went to SBI NRI branch the manager told me I should keep NRI account and my local income should come to NRO account. I should not keep any resident accounts. My understanding was since I live in India for more than 182 days I am a resident here hence should close the NRI accounts!

I looked up SBI site FAQ and it says ( in point b under residential status heading) that if one has employment outside India they are considered non resident...

https://www.sbi.co.in/portal/web/nri/faq

I am a bit puzzled here. My wife has started a business here in India so the best combination for us would be that she stays the first holder for all resident accounts ( I stay as joint second holder ) and I keep all the NRI account as first holder and she stays as second holder. However I have very little confidence in my CA/ bank managers as my situation is quite unique. So please need clarification that what I am thinking here is correct.

Many thanks guys in advance

g_senthil_mm · Post by **g_senthil_mm** » Thu Aug 30, 2018 5:02 pm

If you are a resident in India, I guess you need to pay tax in India for your UK salary as the salary is accrued in India.

Our situation was bit similar to this but we didn't travel to UK for part time work but the services were rendered from India and we had pay tax for UK salary in India.

dbs · Post by **dbs** » Fri Aug 31, 2018 8:40 am

g_senthil_mm;680041If you are a resident in India, I guess you need to pay tax in India for your UK salary as the salary is accrued in India. ?..

That is correct. If you are ROR in India, you need to pay tax on global income.

Bandicoot · Post by **Bandicoot** » Fri Aug 31, 2018 9:05 am

If what is specified on that SBI web page is correct, then it does seem that going outside India for any length of time for employment, no matter how short, immediately converts your status to "non-resident" for that year. And if that is the case, it is also true that you then cannot hold any resident accounts of your own. Thus far what the manager said is consistent with SBI's published guidelines. However, there is a provision for an NRI/PIO/OCI to be the second joint account-holder on a resident account where the primary account-holder is a resident and a close relative of the non-resident. Maybe that will suffice for your case. Note that technically the RBI provision for this specifies that in such cases the second account-holder should only operate the account for and on behalf of the first account-holder and not for themselves. (The intended scenario is non-resident children operating resident accounts of their aged parents.) But it is unclear whether anyone at SBI can or will monitor this. I myself (as a non-resident) was the joint account-holder for my father's (resident) account at SBI. The access that I had to the account was like any other joint account. This route may work for you and you could be the second account-holder on your wife's accounts.

Alternatively you could perhaps structure your engagement in the UK in such a way that it is not strictly "employment" as in receiving wages - perhaps you can have them pay you directly in India as a business based in India (if you incorporate yourself as a consultancy or something), but doubtless that comes with a raft of additional headaches and paperwork about taxes and such.

With 20/20 hindsight perhaps the real advice would have been to convert your accounts to resident status without having brought up the question of your employment outside India. :-) Unclear if that would have resulted in any trouble other than that maybe your tax returns will still have to be filed as a non-resident?

Good luck!

chak75 · Post by **chak75** » Wed Sep 05, 2018 1:32 pm

g_senthil_mm;680041If you are a resident in India, I guess you need to pay tax in India for your UK salary as the salary is accrued in India.

Our situation was bit similar to this but we didn't travel to UK for part time work but the services were rendered from India and we had pay tax for UK salary in India.

Thanks. I am resident or not that is the question. My UK salary is taxed in UK and is kept in UK. Any idea whether I still have to do what you suggested?

chak75 · Post by **chak75** » Wed Sep 05, 2018 1:35 pm

Yes it's very complicated and I still don't have any black or white answer from my CA

g_senthil_mm · Post by **g_senthil_mm** » Wed Sep 05, 2018 8:40 pm

I suggest you either use calculator or speak to a CA to identify your residential status. There is one in this website and also you can find some in the internet.

If you are a ROR , you need to pay tax on your global income (salary,dividend, capital gains) in India.

If you are a RNOR , you need to pay tax on your global income (only salary I can think of) in India.

Double Taxation will come into play but global income should be mentioned in Indian IT return.