Taxable income of a non-resident Indian citizen on a visit to India (as set, 1961 Act, AY 2018-19)

Residential status

Mr. Sarthak was in India from 12.12.2017 to 06.04.2018. Within the previous year 2017-18 that is 110 days (20 in December, 31 in January, 28 in February and 31 in March); the days in April 2018 fall in the next previous year.

• He is not in India for 182 days or more in 2017-18, so section 6(1)(a) does not make him resident.
• He is an Indian citizen who lives outside India and comes on a visit. For such a person the 60 days in section 6(1)(c) read as 182 days (section 6(1), Explanation 1(b)), and 110 days falls short of 182.

So he is non-resident for assessment year 2018-19. The question gives no stay for earlier years, but here it does not matter: whether or not he was in India for 365 days in the four years before 2017-18, he cannot meet section 6(1)(c) with 110 days, and the conclusion is the same on either outcome.

A non-resident is taxed only on income received or deemed received in India, and income that accrues or arises, or is deemed to accrue or arise, in India (section 5(2)).

Treatment of each item

1. Interest from an Indian bank, ₹35,000: accrues in India; taxable under the head Income from other sources.
2. Dividend from an Indian company, ₹68,000: exempt (section 10(34), which covers dividends referred to in section 115-O); section 115BBDA reaches only a resident with such dividends above ₹10 lakh.
3. Agricultural income in Netherlands, ₹1,45,000, received there: accrues and is received outside India, so it is not part of a non-resident's total income.
4. Technical fees from the Government of India, ₹55,500: fees for technical services payable by the Government are deemed to accrue in India (section 9(1)(vii)(a)), wherever they are received; taxable. The proviso to section 9(1)(vii) would exclude fees payable under an agreement made before 1 April 1976 and approved by the Central Government (or, by its Explanation 1, a later agreement made on proposals approved before that date); the question gives no such agreement.
5. Rent of a house in Netherlands, ₹87,000, received in India: income received in India is taxable for a non-resident (section 5(2)(a)). It is income from house property; no municipal tax is given, so the annual value is the rent, less the standard deduction of 30% (section 24(a)).
6. Gift from a friend, ₹1,25,000, on 04.04.2018: received after 31.03.2018, so it is not income of the previous year 2017-18 at all, whichever way the words in India are read; it belongs to the next year. (Received within the year, a sum from a friend, who is not a relative, would have been taxable under section 56(2)(x)(a) where the sums so received in the year exceed ₹50,000 in aggregate, and for a non-resident only if received in India or accruing there, section 5(2).)
7. Donation to the Prime Minister's National Relief Fund, ₹25,000: deductible in full under section 80G, with no qualifying limit (section 80G(1)(i) read with section 80G(2)(a)(iiia)); a non-resident may claim it.

Computation of total income

His total income is below the basic exemption limit, so no tax is payable on it (Finance Act, 2018, First Schedule, Part I, Paragraph A).

Readings

• The bank interest is taken as taxable interest on an ordinary deposit; the question does not say the deposit is in a non-resident (external) account.
• Row (vi): the words in India are read as describing the friend; on either reading the gift falls outside 2017-18 by its date.