Non-Residential Taxpayer

A non-residential taxpayer is an individual or entity that does not meet a country’s residency criteria for tax purposes but still receives income originating there. Tax laws generally require such persons to pay tax only on income that arises within the taxing jurisdiction, rather than on earnings from abroad. For instance, a person who does not spend the minimum number of days in India during a financial year is treated as a non-resident. A company may also fall into the non-resident category if its key managerial decisions are made outside India. Income linked to the source country—such as wages for services performed within the country, rent from property located there, business profits, gains from local assets, or interest earned from domestic accounts—is taxable for non-residents.

Example:

Consider someone employed in Dubai who also owns a flat in India. The salary earned in Dubai remains outside the Indian tax net, but the rent from the Indian property is taxable in India because it arises from an Indian source.