Tax expert clarifies tax liability on overseas earnings, Indian consultancy income, and EPF withdrawals
If you worked in Oman for more than 183 days between April and October 2024 and started working as a consultant in India from November 2024, your tax liability will differ for each income source based on your residency status and the nature of income, reported businesstoday.in.
According to tax expert Balwant Jain, since you did not stay in India for 182 days or more during the financial year, you will be treated as a non-resident under Indian tax laws. Therefore, your income earned in Oman will not be taxable in India.
However, the consultancy income earned in India will be taxable, even if you are a non-resident, as it arises from an Indian source. You will need to file ITR-3 or ITR-4 depending on whether you opt for presumptive taxation under Section 44ADA.
Oman income not taxable for non-residents, but consultancy earnings in India and EPF withdrawals may be fully taxable, says expert.
Regarding your Employees’ Provident Fund (EPF) balance accumulated between 2016 and 2019:
- If you withdraw it now, it will be taxable because contributions were made for less than 5 years.
- To avoid tax, Jain recommends transferring the EPF balance to your new employer’s EPF account, whenever you take up regular full-time employment in India.
- If you choose not to take up such employment, the entire amount (including interest) will become taxable at the time of withdrawal. Also, interest earned during periods with no contribution will be treated as taxable income.
In summary, only your India-based earnings are taxable, and early PF withdrawals will attract tax unless transferred to a new EPF account under eligible employment.
