Navigating Tax Residency: A Closer Look at Employment Abroad

In today’s dynamic global employment market, individuals often find themselves looking for work outside their home country. This move raises serious issues, particularly in terms of tax residence.

In this blog article, we will look at a case study with a resident individual from India who is starting a career in the UAE and the challenges of managing tax implications. With the help of our experts, we navigate through the complexity of tax laws, providing useful insights and smart advice for individuals facing similar situations.

Our main focus is on an individual who stayed over 181 days in India in 2023-24, establishing himself as a regular resident. According to Indian tax legislation, worldwide income, including salaries received in the UAE, becomes subject to taxation in India. Despite the lack of personal taxation in the UAE, the individual must record and pay taxes on his whole income in India.

To optimize tax benefits, we recommended the individual not spend more than 181 days in India during FY 2024-25. By doing so, he may be considered a non-resident under the rule regarding leaving India for employment outside of the nation. This intentional move may result in a more favorable tax status for his global income.

The customer mentioned the possibility of getting a tax residence certificate from UAE officials after staying continuously for 90 days. The Double Taxation Avoidance Agreement (DTAA) between the United Arab Emirates and India has rules that ban dual residency.

In this case, the problems of dual residence between India and the UAE highlight the importance of carefully reviewing the Double Taxation Avoidance Agreement (DTAA). Aside from resolving house ownership and economic relationships, the DTAA is useful in determining resident status, especially when there are overlapping periods within a financial year in various countries. This shows the critical function of the DTAA in managing the complications of dual residence.

Professional guidance from experts like KDP Accountants can go a long way in helping Non-Resident Indians (NRIs) manage their finances efficiently. KDP Accountants provides a wide range of services customized to meet the specific requirements of NRIs. Our team of experienced professionals has an in-depth understanding of the complexities of NRI tax implications and can offer expert advice on tax planning, compliance, and optimization. KDP Accountants can assist NRIs in identifying investment opportunities and maximizing tax benefits, enabling them to make well-informed financial decisions and achieve their long-term goals.

The above note is subject to further study and clarification. This note does not form an opinion from our end and before taking any decision based on the above, it is recommended to consult our experts on the subject. Kamdar, Desai & Patel will not be liable for any damages (including, without limitation, damages for loss of business projects, or loss of profits) arising in contract, tort, or otherwise from the use of or inability to use this article or any of its contents, or from any action taken (or refrained from being taken) as a result of using this article or any such contents.

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