I worked in India until September 2015 and shifted to US on HB1 Visa in the same organization.All dues were cleared.This year in the month of Sept. 2016 I received retention bonus from Indian employer after TDS deductions. My questions are- 1- For this retention bonus I am liable to pay Income Tax for FY 2015 -16 or FY 2016-17? can I use section 89 of IT act for including this income in year FY 2015-16 for paying my tax ? 2- If I consider it as Income of FY 2016-17 my tax liability will be less. In such case do I have to declare this income in my US Tax returns?In US I have to pay higher rate of tax. What is the way out to minimize tax liability in India or US. I am declaring interest income on my NRE A/C deposits etc
1) The relief u/s 89 is given when the arrears of salary are received across the years. In your case, it appears that the retention bonus was given in the year, which was declared after you left the organisation but applicable for that year. Hence, the income will be considered as the income for the FY 2016-17.
2) As you are probably resident of US, you need to declare your global income, i.e, the income earned in India. You will get credit for the taxes paid in India under DTAA.
Dear Sir,
Retention bonus is taxable in the year of FY 2016-17 and you can't claim rebate for the same.
For taxability in India or us, we need to see whether you are resident in India or in US?
For residency, rules in India, refer the following link:
http://www.bankofbaroda.co.in/int/res_status_tax.asp
Please feel free to call/ revert in case of any doubts
Thanks and Regards
Abhishek Dugar
CA CS B.Com
1. Yes you are liable to pay IT for FY 2016-2017.
2. As per DTAA Agreement you can claim relief.
Replying Mr.Abhishek Dugar I am resident of US for the US FY 2016. During the year 2015 when I moved to US on 27th Sept.2015 I paid US taxes on the US income and to Indian Government as NRI for Indian Income (FY 2015-16) What are the tax implications in US when I want to withdraw PF accumulation in FY 2017-18.Since I will not have any income India,tax in India will be zero.
This question is specifically addressed to another expert.
The PF if withdrawn after certain conditions as per Income tax act is exempted in India. If the exempted income taken outside India is also exempted as per our view
Hello Sir,
I apologize but I am not an expert on US tax laws. I will request you to please approach a US based expert as the tax laws in USA vary from state to state. So, it will be totally based on the state you reside.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Hi
The retention bonus will be taxable only in the year in which you received it. If you were not a resident of India in that particular year, then it is not taxable in India.
Regarding taxation in US, it is recommended that you take the advice of an expert on US Tax Laws.
Regards
Keerthiga
M.Com., CA, LLB
- Section 89 benefit available - and if any liability thereafter tax is payable
- No unless you gold green card in USA no need to disclose this income in USA returns and hence no tax payment there.
- Since it is arrears and TDS already deducted no other means to minimise tax liability.
