Double Tax Avoidance Questions
Scenario: I was working in USA for the last 5 years and came back to India around June 2018 (but I had US salary coming to US bank till Nov 2018). So I no longer hold the status of NRI and isn't eligible for RNOR either. I have filed my tax returns in USA for Federal and State (California) tax for income earned in USA (the tax was deducted at source). I also had Minimum Alternative Tax levied due to stock options I purchased so the tax I had to pay was more than normal income tax.
DTAA: As per DTAA between India and US, Section 90 I can get tax credit for Federal Tax. However as observed in certain other scenarios, it's also possible to claim a credit on state tax by Section 91 (https://taxguru.in/income-tax/assessee-covered-dtaa-eligible-credit-state-taxes-91-dtaa-providing.html).
Here are my questions:
1. How do I calculate my tax credit based on US returns since it has income from prior financial year as well (US FY is Jan - Dec so Jan - Mar shouldn't be included in Indian tax return). There is a standard deduction of 10,000$ after which the tax is calculated and also the slabs change due to the extra income from Jan-Mar. Do I just find the percentage of tax I paid overall and use that percentage on the taxable income or I need to re-calculate the tax only for that amount (in which case it would be unfair since the slab goes down and I get less credit) ?
eg: Income from Jan - March : 20k, Apr - Nov : 80k (all in USD).
Normal Tax calculated : 20k.
Tax after AMT calculated: 22k.
What should be the tax credit I can apply for the income 80k (Apr - Nov)?
2. If I want to claim the CA state tax paid as a credit to my taxes owed in India, how do I represent them in form 67 and also in ITR filing. In Form 67, I can mention separately the 2 credits and have Federal credit as Section 90 and State tax credit as Section 91. However in the income tax filing document, if the country is same, only one of section 90 / 91 can be applied. Which one should I use in both of these forms to get most relief ?
3. If overall I have negative capital gain (aka loss) in foreign transactions, is it possible to use it as carry forward loss or use as credit against taxes owed ?
Thanks for the help.
Asked 6 years ago in Income Tax
