• Tax on salary arrears for work done abroad but received in India - status resident Indian

I am an employee of public sector undertaking and resident indian. I was deputed for 2 years by my company to Singapore office in March 2021. My tenure ended in March 2023 and I returned to India on 27 March 2023 to my parent office in India.

During my stay in Singapore, I was paid my basic and Foreign compensatory allowance and I paid income tax at the rate of 10% to Singapore government.

I was filing nil IT returns in India as I do did not have any income in India.

On February 28, my company has paid me arrears of salary (due to increase in FCA) for the period from September 2021 to March 2023 which has resulted in my income for current financial year crossing 50 lakhs thereby I am incurring additional surcharge.This has resulted in me paying over 30% tax (instead of 10 % if I had received my arrears in Singapore) and additional surcharge.

Request advise on whether the arrears for wages earned for tenure served in Singapore can be apportioned over the financial years 2021-2022 & 2022-23 which will help in not only reducing the taxable income for the current financial year but also nullify the surcharge.
Asked 2 months ago in Income Tax

Hii

 

In income tax their is a section 89(1) , which provides relief of tax in case of arrear of salary,

Please go through this, this will definitely helps you 

Lalit Bansal
CA, Delhi
773 Answers
61 Consultations

5.0 on 5.0

Hello,

 

To manage tax on salary arrears received in India for work done in Singapore:

  1. Global Income Taxation: As a resident, your global income is taxable in India, including arrears from abroad.

  2. Section 89(1) Relief: You may claim relief for salary received in arrears under Section 89(1) by filing Form 10E.

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
212 Answers
4 Consultations

5.0 on 5.0

Arrears of salary received in India for services rendered outside India is considered as an Indian income

As you were NRI in F.Y. 2021-22 & 2022-23 only Indian income was taxable in both the years. Arrears of salary if received in past years would be treated as foreign income in India. You can claim relief u/s 89(1)

 

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

Yes you can apportion it as you are receiving salary for period when you were non-resident hence you can claim it as exempt but for that you need to check as there could be a probable issue in comparing total salary shown by employer and total income shown by you but you can surely show it and claim exemption.

 

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

Thank you.

Naman Maloo
CA, Jaipur
4272 Answers
97 Consultations

5.0 on 5.0

In your situation, it's essential to understand the tax implications both in Singapore and India. However, I'll focus on the Indian tax implications based on the information provided.

The payment of arrears for the period you served in Singapore is considered income earned abroad but received in India. As per Indian tax laws, this income is taxable in India if you are a resident for tax purposes in India.

Given that you were physically present in Singapore for more than 182 days during the financial years 2021-2022 and 2022-2023, you may qualify as a non-resident for tax purposes in India for those years under the "Physical Presence Test" of the Indian Income Tax Act. However, you have mentioned that you did not have any income in India during those years, which may indicate that you were indeed a non-resident for tax purposes in India during those years.

If you were a non-resident for tax purposes in India during the financial years 2021-2022 and 2022-2023, the arrears of salary received in India for the period served in Singapore should not be taxable in India for those years. Instead, they would be taxable in India for the financial year 2023-2024 since you returned to India in March 2023 and became a resident for tax purposes in India from that time onwards.

We can help you properly apportion the arrears over the relevant financial years and advise you on the tax implications, including any relief from double taxation under the Double Taxation Avoidance Agreement (DTAA) between India and Singapore.

 

Thanks
Damini

Damini Agarwal
CA, Bangalore
407 Answers
31 Consultations

5.0 on 5.0

Ideally, the salary received for the period you were NR in India should not be taxable in India merely on receipt in India. However, this is not free from litigation. 

 

For arrears taxable in India, you can claim the relief u/s 89. 

We can help you properly apportion the arrears over the relevant financial years and advise you on the tax implications, including any relief from double taxation under the Double Taxation Avoidance Agreement (DTAA) between India and Singapore.

Prerna Peshori
CA, Pune
194 Answers
11 Consultations

5.0 on 5.0

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