DTAA global income from US company salary - deductions, expenses
I relocated to India in Dec 2017 from US after 4 years. For 2017-18 financial year, my status is "Resident" as i stayed more than 183 days in India (As i visited India in 2017 couple of time as a part of my relocation). I have only US salary income, no Indian income.
And filed 2017 US as "Resident" in US and i ahve to file as "Resident" in India.
I am surprised to know, that as per DTAA with USA, State taxes are not considered for Tax credit, and also no HRA (as i paid 10% my US income to Rent) and no other deductions. DTAA, in reality is not avoiding the double taxation and in many ways it is penalizing the tax payer.
Any kind of moving expenses/benefits i am eligible/apply other than 80C,80DD etc.
Asked 6 months ago in Income Tax from Hyderabad, Telangana
It is a well settled law under DTAA that you can claim FTC on the income earned in other country. You can claim the credit of foreign tax paid in USA from the total tax liability in India. You are not eligible for any deduction/expenses including HRA except deduction u/s 80C/80D/80DD. Deduction of HRA is available only in the context of Indian Income tax law and not for other foreign country tax laws. Salary earned by you is US income which is taxable in India because of your residential status in India against which you can claim FTC from the total tax liability in India.
The "claim the credit of foreign tax paid in USA" doesn't give credit to all the taxes.I feel the DTAA is not fare to tax player as it is not considering state taxes and other expenses etc. How can i report my grievance to the Indian IT dept. Every one has to pay huge taxes almost whatever they paid to US Fed taxes to the Indian IT, in additions to the US taxes on the same income as it is not considering the US state taxes.
Asked 6 months ago
Article 2 covers only Federal taxes which are union taxes only. You can not claim state taxes as there is no law or system to set-off state taxes with central taxes. I don't think there will be any outcome of your grievance as it is clearly mentioned in Article 2.
Sorry to say that you are not eligible for any moving expenses etc. However, you can take a position that the Salary is taxable in USA and not in India. You have paid the respective taxes in USA and their is no need to pay taxes in India.
please obtain tax residency certificate from USA.
The basic concepts of DTAA are that a sovereign state enters into an agreement with a sovereign state. US States (as US is a federation) are not part of the DTAA as they are not sovereign states.
Hence, it is logical that taxes paid to other than sovereign state (unless specifically included) shall not be part of the total benefit allowed to a taxpayer.
It may seem unfair to you, but, that is the best way a DTAA can be executed and implemented. Else, it will create huge problems for implementing agencies.
I don't see any benefit of raising any query regarding this, unless such taxes are specifically included under reliefs within DTAA.
No such expenses shall be allowed.
Only the credit of income tax paid shall be provided. However, nothing can be done in this regard.
Unfortunately, you cannot claim any benefits that are applicable to Indian residents in this context. You will get credit for the taxes that you have paid in US and nothing more. In my opinion, there would be no point in raising this issue with the Indian IT department since this is how the Income tax laws with regards to DTAA works.