Advise Rashmi suitably to minimise her tax liability based on the facts given below. Rashmi, an Indian citizen, joined University of Toranto as a professor in Canada, on a monthly salary of Canadian $10,000 on 1st April,

CS Professional · Advanced Tax Laws and Practice · PYQS · December 2018
Advise Rashmi suitably to minimise her tax liability based on the facts given below. Rashmi, an Indian citizen, joined University of Toranto as a professor in Canada, on a monthly salary of Canadian $10,000 on 1st April, 2015. She wants to come to India in the year 2017 and to stay continuously for a period of 11 months to complete her house construction in Delhi. She wants to know whether she can avoid payment of income tax legally on her foreign income earned. She can come to India at any time in 2017 for this purpose.

Answer & Explanation:

The period of 11 months may be staggered over 2 previous years, in such a way that the basic condition for residence is not satisfied i.e. Rashmi may be treated non-resident in India if her stay in India is less than 182 days during relevant previous year. Therefore, Rashmi can stay in India upto 362 days at a stretch spread over two financial years (181 days in 2016-2017 and 181 days in 2017-2018) without becoming residents in India in any of the previous year.

Topics: Income Tax Act, 1961

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