r2i forum

I'm reading up on RNOR and trying to understand the tax benefits. The excel sheet from one of the other stickied posts was very helpful in determining individual RNOR period. I wanted to find out what tax benefits are allowed for foreign income during RNOR period. I'm looking at the most common forms of income like W2 income, interest and dividend income.

Hi ubayogi,

During your RNOR period, the following foreign sources of income may not be taxed in India:

1) Interest
2) Dividend
3) Capital Gains
4) Foreign property Rental Income

As far as Salary Income is concerned, if you are on payroll of the foreign company, but you are providing the services by staying here in India, you might have to pay the taxed to Indian government even if you are in your RNOR status. The reason being the such income is deemed accrue while your stay in India. Though you will be eligible for tax credits if India has a DTAA with the foreign country.

We assist in providing both USA and India tax filing, you can contact us for more information on [email protected]

Regards,
KKA

Thanks KKA. I'm looking at a situation where someone is on foreign disability income during RNOR. The disability income is being reported on form W-2 by the foreign insurance company. Any thoughts on that.

kkassociate;361216Hi ubayogi,

During your RNOR period, the following foreign sources of income may not be taxed in India:

1) Interest
2) Dividend
3) Capital Gains
4) Foreign property Rental Income

As far as Salary Income is concerned, if you are on payroll of the foreign company, but you are providing the services by staying here in India, you might have to pay the taxed to Indian government even if you are in your RNOR status. The reason being the such income is deemed accrue while your stay in India. Though you will be eligible for tax credits if India has a DTAA with the foreign country.

We assist in providing both USA and India tax filing, you can contact us for more information on [email protected]

Regards,
KKA

KKA, in the above scenario, if I have salaried income in US, say, through January through July 31, 2011 and I return to India on Aug 1 and start working for a different employer in India. Is the income I earned in US taxable in India (during RNOR period)?

Instead of working for a different employer, if I continue to work for my US employer from India from Aug 1, is it that I will be taxed only for income earned from Aug 1 onwards? Or will I need to pay tax in India for income earned from April 1 through July 31 as well?

Thanks,
SJ

HI Sj,

You will be RNOR in the first year of return (provided your fulfill other conditions and return in August), you income earned in US for the period from April - July 31st will not be taxed in India, even if you work for the same employer.

We provide assitance in both US and India tax filing services from Pune. You can email us your complete details on [email][email protected][/email] or visit us at www.kkassociate.com

Regards,
KKA