by Ms. Saroj Maniar
The taxability of income depends on the residential status under the Income - tax (IT) Act and not under the Foreign Exchange Management Act (FEMA).
Under FEMA, if a person goes outside India for employment or / business, she would be considered a non-resident. Under tax laws, the residential status is determined on the basis of the number of days one stays in India during a financial year.
If a person is a non-resident under FEMA, but a resident under tax provisions, her worldwide income would be liable to tax in India. This may particularly happen in the initial year if a person goes outside India for employment in the second half of the financial year.
If her stay in India exceeds 182 days in that financial year, her worldwide income is liable to tax. Hence, the salary earned outside India would be liable to tax in India, subject to the benefits of DTAA, if any, with the country where the salary is earned.
If the salary is taxed in India, she would be entitled to get tax credit for foreign tax paid on salary. If a person is a non-resident under the Income-tax Act, the salary earned outside India - where services are rendered outside India & salary is received outside India - would not be taxed in India.
However, if the salary is earned, received or has arisen in India, it would be taxable in India, irrespective of the residential status.
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