Non-resident

A Non-Resident is a person or entity that does not live in a country long enough to be considered a tax resident according to local laws. Non-residents are generally taxed only on income earned or sourced within that country, unlike residents who may be taxed on worldwide income.

Key Points:

1. Limited Tax Liability: Taxes apply only to domestic-sourced income.
2. Residence vs Non-Residence: Residents → taxed on global income; Non-residents → taxed only on local income.
3. Common Examples: Individuals working abroad most of the year, foreign companies earning income in another country, temporary visitors earning local income.
4. Tax Treaties: DTAA agreements prevent double taxation and define non-resident taxation rights.

Example:

An Indian citizen works in the US for 10 months in a year. In India, they are a non-resident and pay tax only on income earned in India, while US-sourced income may be taxed in the US.