Income tax liability of an OCI
The income tax liability of an Overseas Citizen of India (OCI) is primarily determined by their residency status under the Indian Income Tax Act.
Here’s a breakdown of how residency status affects OCI taxation:
- Resident: If an OCI meets the residency criteria (typically staying in India for over 182 days in a year or 365 days in the past four years), their
global income is taxable in India. This means all income earned worldwide, regardless of its source.
- Non-Resident: If an OCI doesn’t meet the residency criteria, they are generally considered a non-resident. Their income is taxable in India only if it:
- Accrues or arises in India.
- Is received or deemed to be received in India.
- Is from a business controlled in or a profession set up in India.
Resident: If an OCI meets the residency criteria (typically staying in India for over 182 days in a year or 365 days in the past four years), their
global income is taxable in India. This means all income earned worldwide, regardless of its source.
Non-Resident: If an OCI doesn’t meet the residency criteria, they are generally considered a non-resident. Their income is taxable in India only if it:
Accrues or arises in India.
Is received or deemed to be received in India.
Is from a business controlled in or a profession set up in India.
It’s important to note that specific tax rules and exemptions may apply to OCIs based on their individual circumstances and the nature of their income.
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
