Do I have to declare foreign income if I already paid tax abroad?
As a resident, yes. Reporting and relief are two separate steps and the first does not depend on the second. The income goes on the return because it arose, and relief for the foreign tax is then claimed under its own rules, which may give full credit, partial credit or none. Leaving the income off because tax was paid elsewhere understates the return and forfeits the relief at the same time, since a credit cannot be claimed against income that was never reported. It also leaves nothing on the file to match against information the other country may exchange.
What actually counts as worldwide income on a resident return?
Income of every kind, wherever it arises: employment and self-employment, business profits, rents, interest, dividends, royalties, pensions, gains on disposals, and distributions from foreign entities. The source has no bearing on whether it is reported; it bears on which country taxes first and what relief is available. Two practical points follow. Amounts are reported before foreign tax was taken off rather than after, and they are converted into the reporting currency. Reporting the net figure that reached the bank account is the commonest error, because it understates the income and quietly drops the credit claim with it.
How is worldwide income split in the year I moved countries?
At the date residence changed. For the part of the year you were resident, income is reported wherever it arose; for the remainder, only income arising in that country falls into its net. Everything therefore turns on the date, which is why the date is evidenced rather than chosen for convenience. Two further points catch people out. Income can be received after the change while relating to the resident period, so it is the arising that is tested rather than the payment date. And the other country is running the same exercise from its own side and should reach the mirror answer.
Am I taxed on worldwide income as a non-resident?
No. A non-resident is taxed on income arising in the country, so the work moves from gathering everything to deciding what has a source there. That is a legal question rather than an intuitive one: employment income is generally sourced where the duties were performed, rental income where the property is, and business profits by reference to whether there is a taxable presence. A treaty can narrow the result further. Over-reporting is common in this direction, and a non-resident return carrying foreign salary or foreign investment income usually wants reviewing rather than filing.
Is foreign income taxable if I leave it in an overseas account?
Under a system that taxes income as it arises, yes. The tax point is the arising, not the transfer, so money kept in a foreign account is taxed in the same year as money brought home. Some countries tax on a remittance basis instead, which is where the belief comes from, and establishing which basis applies to you is the first question rather than an afterthought. Separately, holding funds abroad often triggers reporting obligations about the account itself, which are distinct from the tax on the income and carry their own consequences for being late.
Which exchange rate do I use for foreign income?
The principle is that each amount is converted on a basis appropriate to when it arose, applied consistently, and documented. Using a rate from the wrong date, or a different basis for the income than for the foreign tax credited against it, produces a mismatch a reviewer will notice even where the underlying facts are right. Keep the source of the rate and the date it relates to with the working papers. Where income is received in instalments through the year, decide the approach once and apply it to every instalment rather than item by item.
Do NRIs pay tax on money sent to India?
Sending your own funds to India is a transfer of capital, not income, so the remittance itself is not taxed. What is taxable is income the money then earns in India — interest, rent, capital gains — under the rules for the account type it sits in. Sending money out of India is the direction that needs certification before the bank will act. See NRE, NRO and FCNR accounts.
How does cross-border tax planning work?
It starts with facts rather than structures: which countries have a claim on you, what each one taxes, and where the two overlap. From there the decisions are about order and timing — which country taxes first, where relief is claimed, and whether a filing or a certificate has to be in place before money moves rather than after. Most of the value is in the sequencing, because relief claimed late is usually relief recovered slowly. See international tax planning.
