NRIs should check their tax residency certificates for smoother compliance

Understanding tax residency rules and maintaining proper documentation is imperative to ensure smooth tax compliance

The Income-Tax Appellate Tribunal (ITAT), Delhi bench, recently ruled in favour of Devi Dayal, who had been deputed by his employers to work on a project in Austria. The ITAT ruled that salary and allowances earned abroad by a ‘non-resident’ for services rendered overseas are not taxable in India.  The employer disbursed both the salary and compensatory allowance overseas, with the allowance accessible through a credit card valid only in Austria.

“Since he had failed to furnish a Tax Residency Certificate (TRC) from Austria, the tax authorities deemed the allowances taxable in India. However, the ITAT ruled in the taxpayer’s favour,