Your Indian tax liability as an NRI in New Zealand depends on your 'residential status' under Section 6 of the Income Tax Act, decided every year by day-count, not by your OCI/citizenship status. As a Non-Resident, only income that is earned or received in India is taxable in India. Separately, New Zealand's Inland Revenue applies its own day-count and 'permanent place of abode' tests for New Zealand tax residency, and the India-New Zealand Double Taxation Avoidance Agreement then prevents the same income being fully taxed twice.
How Indian residential status is decided -- the day-count rules
Per the Income Tax Department's own guidance, an individual is a Resident of India in a
tax year if they meet either of two tests: (a) present in India for 182 days or more in that
year, or (b) present for 60 days or more in that year AND 365 days or more
across the preceding four years. Anyone who fails both tests is a Non-Resident (NRI) for
that year.
Special relaxations that matter for people based in New Zealand
- Indian citizens leaving India for employment abroad are tested only against the
182-day rule for that year.
- Indian citizens/PIOs visiting India are also generally tested against 182 days,
EXCEPT that a 120-day rule applies instead of 60 days if the person's total
Indian-sourced income exceeds ₹15 lakh in that year.
- Deemed Resident: an Indian citizen with more than ₹15 lakh of Indian-sourced
income who is not liable to tax in ANY other country is deemed an Indian resident regardless of days
spent in India.
New Zealand's own residency tests
Separately from India's rules, New Zealand's Inland Revenue treats an individual as New Zealand
tax-resident if they are present in New Zealand for more than 183 days in any 12-month period, or if they
have a permanent place of abode in New Zealand -- a fact-specific test looking at whether
the person maintains a home and ongoing ties there, independent of the day-count test. It is entirely
possible to be non-resident in India under Indian rules while still being New Zealand tax-resident under
these tests, or vice versa.
The India-New Zealand DTAA -- avoiding being taxed twice
India and New Zealand have a bilateral Double Taxation Avoidance Agreement. Where the same income could
otherwise be taxed in both countries, the DTAA lets the taxpayer claim credit in one country for tax already
paid in the other, under the article of the treaty that applies to that income type. To claim DTAA relief in
India, an NRI typically needs a Certificate of Residence from New Zealand's Inland Revenue and to file Form
10F.
Filing an Indian tax return as an NRI
An NRI must file an Indian Income Tax Return if their total Indian income exceeds the basic exemption
limit, or in certain other specified situations. NRIs typically use ITR-2 or ITR-3 depending on the nature
of their Indian income.
Does holding an OCI card make me an Indian tax resident?
No. Residential status for tax purposes depends entirely on physical presence in India during the
relevant year under Section 6.
What is a “permanent place of abode” for New Zealand tax purposes?
It is a fact-specific test Inland Revenue applies looking at whether a person maintains a home and
ongoing connections in New Zealand, separate from the straightforward 183-day count -- someone can be
treated as New Zealand tax-resident under this test even with fewer than 183 days present in a given
period.
Is NRE account interest really tax-free in India?
Yes, interest earned on NRE and FCNR accounts is exempt from Indian income tax as long as the account
holder retains non-resident status under FEMA -- NRO account interest is taxable.
How do I get a Certificate of Residence from New Zealand to claim DTAA benefits?
Inland Revenue issues a Certificate of Residence on request for New Zealand tax residents, which is then
submitted along with Form 10F to Indian tax authorities to claim DTAA relief.
