The scope of taxable income for a Financial Year (FY) would depend upon the Residential Status (RS) of Returning Indian under The Act. The residential status in turn depends on the physical presence of the Returning Indians in India during the FY and prior 10 FYs.
Accordingly, taxability of income earned by Returning Indian shall be as under:
• if his/her RS is as a Non Resident in the year of return to India, then income earned outside India shall not be taxable in India in that year.
• if his/her RS is as a RNOR then income earned outside India shall not be taxable in India as long as his RNOR status is achieved in the year of return and later years by restricting number of days stay in India (Generally one can achieve RNOR status for a period of two years subsequent to the year of return.).
• if his/her RS is as ROR in the year of return to India then income earned in India and outside India shall be taxable in India the year of return.
Returning Indian should carefully plan his stay in India in the year of return and subsequent years to take the benefit of Non Resident/ RNOR status and protect the exposure to tax in India of the income outside India.