• NRI, doing part time freelancing

I'm an NRI, living in Europe. I have earned some income from freelancing projects from the USA marketplace (I've signed W-8BEN with them) and transferred it to Indian Saving Account. I have a couple of questions

1. Can I legally continue working like this?
2. Should I show that income in Indian Tax Filing? If yes, should I file NRI or non-NRI tax?
3. Can I ask freelancing projects to send me the payment into NRE account?
4. Can I keep getting money into my Indian Saving account like that? 

Thanks in advance.
Asked 5 years ago in Taxation

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4 Answers

1.  It is your choice to choose your profession, if you are not practicising any restrictive trade practice, you are at your liberty to practice legally valid profession.

2. If your status is 'NRI,' your income which is earned or accrued in India is taxable in India. ... Income which is earned outside India is not taxable in India. Interest earned on an NRE account and FCNR account is tax-free. Interest on NRO account is taxable for an NRI

3. It is an arrangement between you and your paymaster.

4. Read the 2nd answer above. 

As per the current Income Tax Act, if an Indian citizen stays out of the country for more than 182 days, he becomes non-resident. It is now changed that in order to become a non-resident, he/she has to stay out of the country for 240 days.

To qualify for NRI status:

The positive aspect is that in most cases, NRIs can continue to visit India for up to 181 days in the financial year and even in other cases where the period of stay in India is 120 days (and also for 365 days or more in preceding 4 years) or more or in case of Indian citizens who are not tax residents of any other.

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

1. Yes

2. Yes if it's not deducted in foreign country. 

3. Yes

4. Yes

Prashant Nayak
Advocate, Mumbai
34514 Answers
249 Consultations

1. There is nothing illegal in what you are doing.

2. Mere transfer of income to your savings account maintained in India, does not make it taxable in India if you are paying tax in it where you live now. You should though reflect it in your ITR as a NRI.

3. Yes.

4. Yes.

Ashish Davessar
Advocate, Jaipur
30840 Answers
981 Consultations

1.A NRI’s income taxes in India will depend upon his residential status for the year. If your status is ‘resident,’ your global income is taxable in India. If your status is ‘NRI,’ your income which is earned or accrued in India is taxable in India. Salary received in India or salary for service provided in India, income from a house property situated in India, capital gains on transfer of asset situated in India, income from fixed deposits or interest on savings bank account are all examples of income earned or accrued in India. These incomes are taxable for an NRI. Income which is earned outside India is not taxable in India.

2. NRI or not, any individual whose income exceeds Rs.2,50,000 is required to file an income tax return in India.

Any income earned by an NRI from a business controlled or set up in India is taxable to the NRI.

For example:

Rahul worked out of Singapore on a temporary assignment for 4 months and earned in Singaporean Dollars during that time. He got this income credited to a bank account here in India. He has returned back home now. How should he file his income tax return? Rahul’s taxes for this year will depend on his residential status. Since Rahul has not been outside of India for more than 182 days, he will be considered a resident. He will be required to file his income taxes in India this year. This will also include his salary earned during the foreign assignment in Singapore. If the assignment extends to more than 182 days, Rahul’s residential status will change and he will be required to pay taxes only on the Indian income earned thus far. Here, note that Rahul’s foreign income credited to an Indian bank account is taxable in India.

3. Your salary income is taxable when you receive your salary in India or someone does on your behalf. Therefore, if you are an NRI and you receive your salary directly to an Indian account it will be subject to Indian tax laws. This income is taxed at the slab rate you belong to.

Similar to residents, NRIs are also entitled to claim various deductions and exemptions from their total income.

 

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

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