Indian Income Tax

Ganesh45 · Posted: Fri Jul 31, 2009 4:13 am Post subject: Indian Income Tax

Namaste/Namaskarms/Vanakkam

I love being in India and planned to have a second home there in retirement. I’m well on my way to crossing the 182 day threshold this fiscal year which would obligate me to pay Indian income tax on my worldwide income. Having a tourist visa, I cannot work or invest in incredible India. My only Indian income is interest paid on bank accounts used for my living expenses and modest gifts to Indian friends.

My US government pension is 90% of my worldwide income. The other 10% is interest, dividends and capital gains from a US based general partnership. The amount of interest from Indian deposits contributes less than .005%. Using "back of the envelope" estimation, my taxes will double because Indian tax rates are higher and deductions lower than in the US. I looked at the US-India tax treaty and was greatly relieved that the source country would only tax government pensions. Hurray, I’d only be responsible for paying Indian income tax on the partnership income. Then I read that becoming a resident of India would make my pension subject to Indian taxes as well.

It seems that all of the money I’d save by being in India in retirement would be erased by Indian income tax. Am I missing or misinterpreting something? What is the experience of other US citizens living in India? Confused

piglet · Posted: Wed Sep 02, 2009 2:09 pm Post subject: Re: Indian Income Tax

Hi Ganesh45...

Welcome to Expat Focus
I notice your question has not been answered... I was wondering if it would be worth asking one of the experts here... www.expatfocus.com/expat-finance

or posting your question on the Personal Finace forum.

www.expatfocus.com/ind...wforum&f=2

Kind regards
Piglet

Ganesh45 · Posted: Wed Sep 02, 2009 4:10 pm Post subject: Re: Indian Income Tax

Piglet,

Thank you for the suggestions. I've posted the original question to the experts. I've added the value of "Indian Residency" to the original question and posted it in the personal finance forum.

In reflecting upon question over the last month, I've begun exploring retirement in Thailand and Malaysia as financially prudent alternatives to the much preferred India.

Ganesh