• Foreign income tax query

I moved to Australia on 4th Sep 2017 for fellowship (advanced training) and will return to India in first week of August 2018. I am earning income in Australia for my tenure with government hospital and paying taxes in Australia for the same.

Questions:

1) Will my income in Australia be doubly taxed on remittance to India or will it be exempted under DTAA?
2) Should I convert my bank account to non-resident account? I think no because neither I intend to stay indefinitely and I also fulfill the condition 2 of residency IT Act sec 6 (365 days stay in 4 previous years and 60 days in previous year)?
3) What does 15% TDS mean under DTAA- any thing to do with 30% tax I am paying to Australian government (tax resident bracket), should I be paying less or its something not connected?
Asked 8 months ago in Income Tax from Australia
Hi, 1. No. You wont be taxed twice. Either your income will not be taxed in India or you will get the credit of Australian taxes in India. 2. No. If intention is not to settle outside, dont get it changed. Yes, you fulfill the condition of 365 days in 4 years. I am assuming you dint leave India for employment purpose. You left for study. 3. Which article of the treaty you are talking about? Please feel free to call revert in case you need more clarity. Thanks and regards Abhishek Dugar CA CS B.Com
Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

Hi 1. No. It would be taxable in Australia. Show the income in ITR in India and claim foreign tax credit. 2. No need to change the residential status. 3. 15% TDS? Please clarify your source of query
Lakshita Bhandari
CA, Mumbai
2243 Answers
81 Consultations

5.0 on 5.0

1. No, it's not upto you. It depends upon the nature of income and wordings of the treaty. 2. Ok, as per FEMA, you are not resident of India in FY 2018-19. So, you may consider changing the accounts. Please consult with your bank. Please feel free to call/ revert in case you need more clarity. Thanks and regards Abhishek Dugar CA CS B.Com
Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

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No double taxation will be there.. Since you left India for employment ,you will be NRI for current Financial yr..
Swati Agrawal
CA, Indore
689 Answers
1 Consultation

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In that case, you will be considered as moving abroad for employment and thus become an NRI as soon as you leave. So, the answer on tax remains same. The tax on income in Australia shall be taxable in Australia only. You don't need to disclose the Australian income in Indian ITR. As far as bank accounts are considered, since you become an NRI according to income tax act and FEMA, residential status in banks were required to be changed.
Lakshita Bhandari
CA, Mumbai
2243 Answers
81 Consultations

5.0 on 5.0

Hi, 1. There will be no double taxation. You will need to pay your taxes in one country. 2. Since you do not intend to stay for long, you may not change your bank accounts. 3. Not sure of your query on the 15% taxation. Can you be specific as to your query here? Regards, Nikhil.
Nikhil Khanna
CA, Mumbai
1426 Answers
19 Consultations

4.8 on 5.0

Hi, 1. Earlier I miscalculated it. For residency purpose in FEMA, you need to look your stay in previous year. So for FY 18-19, your stay in FY 2017-18 will be relevant. Hope I am clear now. 2. Sorry, we dont analyse the treaties here. It's altogether an assignment and not a routine query. Please feel free to call/ revert in case you need more clarity. Thanks and regards Abhishek Dugar CA CS B.Com
Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

HI, 1. The residential status for FY 2017-18 would be Non resident as you were in India for less than 183 days ( considering your stay period from April 1, 2017 till 4th sept 2017) 2. The residential status for FY 2018-19 would be Resident as you will be there in India for more than 183 days ( considering your stay period from August, 2018 till March 2019). Now please refer the replies to the queries,asked in the first instance: 1) In India, your australian income will be taxed only in those financial years when you will qualify as resident of India. For the financial year when you qualify to be non resident, there will no taxability of income earned from outside India even when you remit them. Given that you will qualify to be resident of India for FY 2018-19, the income earned during the tenure of Australia i.e. from April till you return India, will also be taxable in India as the global income. However, with the help of DTAA, India would be giving you the tax credits for the taxes already paid in Australia. 2) Since you will remain resident in India, in the FY 2018-19, you need not declare to bank as of now with respect to your residential status unless there are any changes in your plan of returning back. 3) The rate of 15% mentioned under TDS implies that the taxes will be deducted at this rate whenever you will receive such income. Definitely they have a relation to your actual tax slab rate. So, any income which is doubly taxed, shall be chargeable to tax as per the beneficial rate. By this I mean, if in the domestic tax laws, the rate of tax is 30% with respect to any nature of income and for the same income DTAA specifies any beneficial rate of taxation, then you may take the advantage of beneficial rate applicability. Further, any taxes deducted under TDS provisions, you will be entitled to take the credit of such taxes at the time of filing the final tax return. Hope this helps ! Should you have any other queries, please feel free to mention. Thanks Damini
Damini Agarwal
CA, Bengaluru
269 Answers
13 Consultations

5.0 on 5.0

Dear Sir, Currently you are employed in Australia and australian govt. is deducting TDS for the same. If you will remit the income earned in Australia there is no taxation in India again. Considering F.Y. 2017-18 ,your reisdential status in India is resident therefore your global income would be taxable in India. Income earned in Australia is also taxable in India and also you can claim the benefit of TDS deducted in Australia on same income under the DTAA. Conclusion is no income can be doubly taxed. If any income is doubled taxed then you can claim the benefit of TDS deducted in the origin country.
Vivek Kumar Arora
CA, Delhi
1718 Answers
51 Consultations

5.0 on 5.0

Hello, 1. No, you shall not be doubly taxed. You can very well claim the benefit of DTAA and take the credit of the amount of tax you have paid in Australia. 2. Not required to open up another NRE/ NRO account unless you need it for a specific purpose. 3. The tax rate of Australia has nothing to do with the TDS rate in India. You will just have to apply for a tax credit to your assessing officer in India and provide him with evidences for your tax deducted/ paid in Australia. P.S. I am also currently in Australia for almost an year, so there is nothing to worry about. Trust this clarifies your query. Feel free to call / get back in case of further clarifications. Thanking You. Regards, Rohit R Sharma BCOM, FCA, LLB, CERT. FAFP
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

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