What is Deemed Resident?

High net worth individuals (HNIs) from India increasingly choosing to live abroad in several different nations. Numerous nations grant permanent residency permits and provide tax breaks in exchange for specific investments made within their borders. To combat this mischief, the new notion of deemed resident India treats these "stateless" Indian citizens as tax residents of India. It is essentially an anti-abuse law.

Who is a Deemed Resident?

If an Indian citizen's taxable income from sources within India exceeds INR 1.5 million in the applicable tax year and they are not subject to taxation in any other nation due to their residence, domicile, or any comparable factors, in that case, they will be considered as deemed residents of India. 

• The person's entire worldwide income will be exempt from Indian taxation. However, any income that is earned outside of the country will only be subject to taxation in India under the jurisdiction of the "deemed resident" if it originates from a business managed or practised in India.

• Crucially, a person considered a "deemed resident" might not be qualified to receive benefits under any tax treaty that India has signed because they might not meet the requirements to be a tax resident of any other nation.

I hope this information helps you!

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Residents living in India are supposed to pay tax based on their monthly income. Even if an Indian resident is staying for 120 days he/she is liable to pay tax for that period. So, a person who is deemed resident is supposed to pay taxes as well. I will share with you deemed resident meaning.

What is deemed resident?

The citizens who are not liable to pay taxes in other countries or territories because they have their domicile, residence or any other criteria is called a deemed resident. When this kind of Indian citizen earns more than 15 lakh per year besides having an income from foreign sources is called a deemed resident of India. So, if a person is earning from foreign along with earnings derived inside India for business purposes can be considered a deemed resident. If anyone fulfils this criterion, they will be considered deemed residents even though they are not physically present in India. 

So, such residents are known as NORs in India and they are not treated as ordinary residents.

This concept was first introduced in Union Budget 2020, which came into effect from financial year 2020-2021.

I hope you have learned about the meaning of deemed resident in a nutshell. I hope you find this helpful.

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