Money gifted to your spouse received’t be taxable

I’ve been working within the US for the previous six years. In May, I got here to India for private causes. I proceed to work for a US firm (on US initiatives) remotely from India. I proceed to obtain wage in {dollars} in my US account. I’m unsure when (or if in any respect) I’ll return to the US. My understanding is that from December, I’ll qualify as an RNOR and should file returns in India. Would my US wage be thought-about India-sourced earnings, and would I’ve to pay taxes in India on this wage?

—Name withheld on request

To discover out whether or not your earnings shall be taxed in India, it’s worthwhile to set up your residential standing as per the I-T Act of India for the related monetary yr (FY). Note that this standing might change yr after yr and due to this fact it must be decided for each FY. You can check your residential standing within the following method.

Conditions: a) you’re in India for 182 days or extra within the FY; or b) you’re in India for 60 days or extra within the FY and one year or extra within the 4 FYs instantly previous the related FY. Additional situations: You are resident in India in two of the ten FYs instantly previous the related FY; and you’re in India within the seven years instantly previous the related FY for 729 days or extra.

If you meet any of the primary set of situations and each the extra situations, you shall be thought-about a resident in India. If you meet any of the primary situations however don’t meet the extra situations, you shall be thought-about a resident however not ordinarily resident (RNOR) in India. If you don’t meet any of the primary situations, you shall be a non-resident in India. So lengthy as you’re a non-resident or RNOR in India, the earnings that’s earned and obtained by you outdoors India shall not be topic to tax in India.

I’m an NRI staying within the UAE for greater than 10 years. I switch my financial savings to an NRI account in India. Every month, I switch a hard and fast quantity to a joint account that I maintain with my spouse. My spouse has no earnings of her personal. Will any earnings tax be levied on this financial savings account?

—Name withheld on request

The cash gifted to your spouse won’t be topic to tax in India as she is a specified relative as per the I-T Act. The cash obtained by her shall not be taxable in your or her arms. In case she invests this cash and an earnings is earned from it, there could also be tax implications for you.

Archit Gupta is founder and chief govt, ClearTax.

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