• Staying in US for 12 months, salary in INR but allowance in US.

Hi, I stay in USA for the last 13 months (From Nov 2017) and I get the salary in Indian rupees in Indian bank account. In USA, I get allowances (Expenses) which are not taxable. What is the process of filing tax in India. If i file the tax in USA, how can i get an exemption in India?
Asked 2 years ago in Income Tax

Hi,

 

- In a total stay of 13 months in USA, two financial years are involved i.e 2017-18 and 2018-19. For F.Y. 2017-18, you are resident in India therefore global income will be taxable. For 2018-19, you are non-resident therefore only Indian income will be taxable.

 

- You are liable to to file ITR for F.Y. 2017-18 only in India. For tax paid in USA, you will get benefit in India.

 

Thanks

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

This concept is called DTAA (Double taxation Avoidance agreement). In case of residents in India, if they are having global income which is taxed doubly then they can claim relief under DTAA. 

 

Yes you are correct.


In F.Y. 2018-19, you are non-resident in India therefore you are liable to pay tax only on Indian income and not on USA income. As the services rendered by you are outside India therefore salary will be taxable in USA only in 2018-19. Form 1116 becomes irrelevant.

 

In F.Y. 2017-18, you were outside India for 4 months only, I don't think there was any tax deduction in USA. Please check your payslips. If such is a case then Form 67 also becomes irrelevant.

Vivek Kumar Arora
CA, Delhi
4063 Answers
338 Consultations

5.0 on 5.0

Hi

 

Since income is received in India, it shall be chargeable to tax in India.

 

For the FY 17-18, you need to claim the foreign tax credit while filing ITR in India through Form 67. 

For the FY 18-19, FTC shall be claimed in US by filing Form 1116.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

Please note that the claim for foreign tax credit is available to a resident assessee. So, you can claim FTC in India only when you are a resident in India I.e. For FY 17-18. In the FY 18-19, you become a NRI and hence you need to pay taxes in India and claim the FTC in US return of income.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

Hi,

 

Although , any amount of income received in India is subjected to tax in India under the tax law, however we may look into the relevant tax treaty to secure a exemption from taxation of certain incomes subjected to certain conditions.

 

Thanks

Damini

Damini Agarwal
CA, Bangalore
384 Answers
31 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

For the FY 2017-18- you were outside India only for 5 month i.e. you are resident in India.

A resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.

 

Also note that in a case of double taxation of income where the same income is getting taxed in India as well as abroad, one may resort to the Double Taxation Avoidance Agreement (DTAA) that India would have entered into with the other country in order to eliminate the possibility of paying taxes twice.

 

For the FY 2018-19- You are non resident . 

Their tax liability in India is restricted to the income they earn in India. They need not pay any tax in India on their foreign income.

 

 

 

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

As per the income tax rule, a citizen stay out of coutry for more than 180 days in a financial year then the status would be Non-resident (other criteria is applicable as well).

Also you stay and receive salary in USA it means no income chargeable in India.

 

if you receive any income (interest, Dividend or etc) from India then you are mandatory to file income tax return in india as well.

Rajkumar Wagh
CA, Kolhapur
45 Answers

Not rated

Yes, the suggestion given by US tax adviser is correct.

 

As per my understanding, for the FY 2018-19 you are NRI. So, you need not to pay any tax on India for your foregin income.

 

However, for the FY 2017-18 you can claim foregin tax credit (based on DTAA) while filing the Income tax return in India.

 

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

Dear Sir

During the A.Y.2018-19 you are Resident in India. Hence global Income is Taxable in India & you can also get Exemption on Account of DTAA.And During F.Y.2019-20 You are Non-resident ,Thus you will not be Liable to pay Tax

Shiv Kumar Agarwal
CA, Delhi
475 Answers
74 Consultations

5.0 on 5.0

Hi

Since you were Resident in India in FY 2017-18, your global Income will be Taxable in India & you can take the benefit of DTAA.

You will not be liable to pay tax in India in FY 2018-19 since you are a Non-resident.

 

Hope that clarifies.

 

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Since you are receiving income in India even though you live outside the income which you received in India would only be taxable and income received outside India won't be taxable since you are resident but not ordinary resident.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
3791 Answers
45 Consultations

5.0 on 5.0

Hi

 

For Fy 2017-18,being resident status ,all your global income will be taxed in India.

And for Fy 2018-19,being Non-resident in India,Only Indian Income will be taxed here.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

A

As per the Indian tax laws, taxability of any income is dependent upon the residential status of person and  sources from where said income is earned. 

Residential status depends on the physical presence of a person in India during the said year and also past 10 years.  So considering this, you need to firstly determine your residential status as per tax laws.

If you happen to be resident in India your worldwide income is taxable in India.  However, if you are non-resident or not-ordinarily resident, then only Indian sourced income is taxable. For the financial year April 2018 to March 2019, if your presence in India is less than 60 days, you will be Non-resident and only your Indian sourced income will be taxable. 

As your salary income is earned from US, it is definitely taxable in US and hence taxes are to be paid in US.  If this income is taxable in India, you can claim credit for taxes paid in US and hence there is no double tax on the same income.  While it is debatable that the salary income received in India for servicing is US is exempt in India, there are various cases in which such income is only taxable where services are rendered by non-resident ie US  and not India. It would be less debatable had your salary been paid in US bank account.

Hence, you can file a return by either claiming credit of the taxes paid in US On salary income or just by taking position that being a non-resident and salary earned for service rendered abroad, it is not taxable in INDia.  It is important to check the position and documents while filing the return. Your tax return for FY 2018-19 is due to be filed by July 2019 in INDia.

.

 

Jasmina Jain Shah
CA, Greater Mumbai
447 Answers
4 Consultations

5.0 on 5.0

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