An NRI's Indian-source income remains taxable in India regardless of South African residence, with relief against double taxation available under the India-South Africa DTAA (signed 1996, amended by a 2013/2014 protocol). South Africa applies its own separate residency tests -- an ordinarily-resident test and a statutory physical-presence test -- so an NRI should confirm their South African tax residency independently rather than assuming Indian NRI status automatically determines it.
Indian residential status and what remains taxable in India
An NRI's tax residential status in India is determined every year by day-count under Section 6 of the
Income-tax Act, independent of South African tax residency or visa status. Once classified Non-Resident,
only India-source income -- rental income, capital gains on Indian property, and Indian-sourced interest,
for example -- remains taxable in India; foreign income is outside the scope of Indian tax entirely for a
genuine NRI.
The India-South Africa DTAA
India and South Africa's tax treaty was originally signed on 4 December 1996 and notified in India in
1998. An amending protocol, signed 26 July 2013 and in force from 26 November 2014, updated Article 25
(Exchange of Information) -- part of the broader global trend toward tax-transparency cooperation, and
directly relevant to how the two countries share financial information (see this platform's Compliance
section). Relief against double taxation generally works through a tax-credit mechanism, and gains from
selling immovable property are taxable in the country where the property is located -- so a gain on
Indian property sold by an NRI in South Africa remains taxable in India first.
South Africa's own tax residency tests -- separate from Indian NRI status
SARS applies two tests independently of India's own residency rules: the “ordinarily resident” test
(an undefined, case-law-driven concept centered on a person's most fixed and settled home), and a
statutory physical-presence test for those not ordinarily resident (present more than 91 days in the
current tax year and each of the preceding five tax years, and more than 915 days in total across those
five preceding years). South African tax residency, once established, ceases only after 330 consecutive
days spent outside South Africa, and ceasing residency triggers an exit tax -- a deemed disposal of
worldwide assets for capital gains purposes. An NRI who is also present substantially in South Africa
should get South Africa-side advice on these tests rather than assuming Indian non-resident status by
itself settles the South African tax position.
