ROR must declare foreign assets in the ITR

My son is a non-resident Indian. He plans to buy a house in his country of residence. Does he have to show it on his tax return (ITR) here?

—Name withheld on request

Under the Indian Income Tax (IT) Act, it is mandatory to report all foreign assets in the ITR if the person qualifies as a Resident and Ordinarily Resident (ROR) of India at during the financial year concerned. such foreign assets in the financial year concerned, together with the nature of the income and the head of income under which such income has been proposed for tax in the ITR must be declared for each foreign asset.

Foreign assets that must be declared include foreign bank accounts, financial interests, real estate, accounts in which a person has signing authority, trusts, any other capital held by the person outside India. You have to be very careful when declaring foreign assets/income in the ITR. Any omissions or misstatements may result in additional tax, interest and criminal consequences under the Black Money (Undisclosed Foreign Income and Assets) and Taxation Act 2015.

Assuming your son does not qualify as a “resident and ordinarily resident” of India during the financial year concerned, he is not required to declare the house outside India in the ITR. If your son qualifies as “resident and ordinarily resident”, he can choose either ITR-2 (if there is no business income) or ITR-3 (for business income) to report the foreign assets and foreign income.

I am a UK citizen and intend to work from India. I am drawing a salary from a business in the UK and tax will be deducted at source. Do I also have to pay taxes in India?

—Name withheld on request

Salary income for services rendered in India will be taxable regardless of the location of the payroll. Assuming you do not have an employer in India, you will have to pay an advance tax in four installments or before filing the ITR through a self-assessment tax, plus interest for the filing late payment of advance tax and self-assessment tax. no later than July 31 following the end of the financial year.

You can claim benefits in the UK under the Double Taxation Agreement between India and the UK to avoid double taxation there.

Sonu Iyer is Tax Partner and Head of People Advisory Services, EY India.

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