Since your relative is in India for last six years, therefore he is indisputably resident of India. For resident of India , scope of total income is provided u/s 5 of the I T Act. which is given as under
5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which
(a) is received or is deemed to be received in India in such year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or
(c) accrues or arises to him outside India during such year :
You will find that for Resident ,even income which arises or accrues to him outside India is taxed.
The double Taxation Avoidance Agreement signed between India and USA , has Article 10, 11 and 13 which deal with dividend,interest and capital gains
ARTICLE 10 – Dividends – 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, ARTICLE 11 – Interest – 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed : ARTICLE 13 - Gains – Except as provided in Article 8 (Shipping and Air Transport) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law.
It is clear from the aforesaid articles of DTAA also that the income under those heads ,are taxable in both States or in the states where the person is resident of .
Therefore , my opinion
- Your relative will have to file return of income if income is above exemption limit.
- Your relative will get relief from double taxation of income under section 90 of the i t Act. you can read more about this here.
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