• Double taxation

I am a us citizen residing in India and I am a tax resident. However as per the dtaa my residency is determined to be that of USA due to the tie breaker rule.

My question is how I should show my USA sourced income in my itr.
Should it be shown in the schedule of exempt income and dtaa article be mentioned
Asked 15 days ago in Income Tax from Chennai, Tamil Nadu

Hi

 

If you're claiming benefit of DTAA whereby your USA sourced income is only to be taxed in USA, you don't need to report USA sourced income in Indian ITR.

 

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

I assume DTAA has been referred to correctly and as per DTAA you are only a resident of USA and not of India..

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

Since you are resident in India, you should offer your worldwide income to tax in India.  You can claim credit for the taxes paid in USA while filing the Indian tax return. 

 

While you may report your US income as exempt income under the DTAA, however, depending on the quantum of income it is likely that the revenue authorities would seek to probe the matter further.  

Jasmina Jain Shah
CA, Greater Mumbai
392 Answers
4 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

Yes, you can show US sourced  income under the exempt income while filing ITR.

 

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

Hello,

 

Since as per the Indian Tax Law, you are considered as Ordinary Resident, your global income would be taxable in India. Any taxes paid on such income in the Foreign Country would be available as tax credit while paying the income tax.

I hope that this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

You can declare the USA sourced income under the Exempt income category. Several disclosures are required for income on which DTAA benefit has been claimed. Reference to the correct DTAA article is also required.

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

Yes I agree...I just cautioned you to maintain proper documents as audit is likely. HOwever, there can be another practical way of doing the return which can only be discussed offline.  

Jasmina Jain Shah
CA, Greater Mumbai
392 Answers
4 Consultations

5.0 on 5.0

Yes. You need to show your US Income in Indian Income Tax Returns. Claim exemption u/s 90 as per DTAA and mention the relevant clause of the DTAA under which you claim exemption

Pradeep Bhat
CA, Bengaluru
511 Answers
41 Consultations

5.0 on 5.0

Hello Sir.

In your case, if you are certain that you would be a resident of US for tax purposes as per the tie breaker rule, then your filing status would be that of a "non-resident". In this regard, you may refer section 90(2) of the Income Tax Act, 1961, which clearly states that the provision of DTAA or Income Tax Act, whichever is beneficial, shall be applicable to an assessee to whom the DTAA applies. In your case, the residency provision as per DTAA is beneficial to you. Accordingly, you would be well within the law to choose to be governed by the DTAA for the purpose of determining residency. Thus, you would be a non-resident in India. 

As a consequence, in your return of income in India, you would just need to report income which is a) received or deemed to be received in India and b) accrued or arisen or deemed to accrue or arise in India.

However, on your US as well as Indian income, you would be required to pay tax in US (as per the US tax laws) and you can claim credit of Indian tax in US.

Kindly note that the aforesaid answer is based on the fact that you are a resident of US as per the tie-breaker rule enshrined under Article 4 of the India-USA DTAA. The aforesaid position is well settled in law. 

Hope to have resolved your query.

Best regards,

CA Yogesh Malpani

 

Yogesh Malpani
CA, Mumbai
19 Answers
1 Consultation

Not rated

If you're claiming benefit of the tie breaker rule and thereby deciding to be a resident in USA, you cannot file ITR in India as a resident. You shall have to declare a non resident status of residence in ITR. 

Since NRIs are not required to report global income in ITR, you are not required to report your USA sourced income in Indian ITR.. not even as exempt income.

 

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

 

This opinion is based on my understanding on the above subject. 

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

Dear Sir,

Before you doubt the credibility of my advise, I would request you to try for youself and try to fill the return as suggested by me. No error is thrown. In case you are using any third party software for filing of return, such error may be an internal check of the software provider. 

Best regards,

Yogesh

Yogesh Malpani
CA, Mumbai
19 Answers
1 Consultation

Not rated

Dear Sir,

 

It is advisable that either show the US income as exempt income or add the same in respective head and claim the credit for taxes paid in US while filing ITR in India.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

It would be advisable to take phone consultation for better understanding.

Hunny Badlani
CA, Madhya Pradesh
1587 Answers
5 Consultations

5.0 on 5.0

Dear Sir,

 

It is advisable to take a phone consultation for detailed discussion.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

Dear Sir,

 

It is advisable to take a phone consultation for detailed discussion.

Payal Chhajed
CA, Mumbai
3730 Answers
50 Consultations

5.0 on 5.0

As discussed over the conversation, in my opinion this cannot be reported under Exempt income if you're showing residential status as resident.


Further the DTAA has to be examined very carefully and proper tax planning is to be done.

Lakshita Bhandari
CA, Mumbai
4255 Answers
239 Consultations

5.0 on 5.0

If you are getting more benefit from DTAA then it will prevail always and you will get the benefit on non resident.

Between Income tax act and DTAA, DTAA will always prevail over Income tax act.

 

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
2688 Answers
24 Consultations

5.0 on 5.0

You would be a non resident so no need to show USA income.

Naman Maloo
CA, Jaipur
2688 Answers
24 Consultations

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