Since I will be paying tax on my income (salary and income from renting out the house) in India itself, do I also need to pay tax in the UK? Will I need to fill up the yearly self-assessment form in the UK?
Can I remit some amount to my account, or that of my wife, in the UK without being taxed?
—Name withheld on request
Whether or not you need to declare your income in the UK or pay tax on it will depend upon your residential status in India which has to be arrived at based on the Income-tax (I-T) Act of India as well as your status in the UK.
If you are resident in India, your entire global income will be taxable in India. If you are a non-resident in India or resident but not ordinarily resident in India, only income which is earned or received or arises in India shall be taxable in India.
Therefore, you need to find out your residential status in India for each financial year separately.
You must do so similarly for your residential status in the UK. In the event your income becomes taxable in the UK, you may take benefit of the double tax avoidance agreement (DTAA) between the two countries to make sure you don’t end up paying tax on the same income twice.
You are allowed to repatriate up to $1 million from the non-resident ordinary (NRO) account subject to conditions as specified. Funds from non-residential external (NRE) accounts are fully repatriable.
There are multiple tax systems prevailing in the UK, one of which is the remittance basis of taxation.
Under this, only the part of your income that you remit to the UK is chargeable to tax in the UK and a tax credit of the remitted part is also allowable under DTAA. However, there are certain conditions attached to this type of taxation, which can be explained better by an expert based out of the UK.
Archit Gupta is founder and chief executive officer, Clear.in.
