Taxation of Indian moving to Singapore for employment

Hey! This is a classic case of double taxation and DTAA application. Here's a detailed breakdown for your query about an Indian moving to Singapore for employment in Feb 2020:

1. Tax Liability in India and Singapore (Article 15 of DTAA)

• Article 15 covers income from employment.

• Since the individual was in India for part of the year (Jan) and then Singapore from Feb onwards, they may be tax resident in both countries for FY 2019-20 (AY 2020-21) depending on days of stay.

• Salary earned for services rendered in India is taxable in India.

• Salary earned for services rendered in Singapore is taxable in Singapore.

• So, yes, income may be taxable in both countries, but the DTAA prevents double taxation by allowing credit.

2. Who Gives DTAA Credit — India or Singapore?

• Usually, India will give credit for taxes paid in Singapore under Article 23 of DTAA (relief from double taxation).

• Since Singapore has a territorial tax system and no tax withheld on salary (tax paid after assessment), India provides relief via credit or exemption.

3. Claiming Double Tax Relief in India U/s 90

• Section 90 provides relief by allowing credit for taxes paid in foreign country.

• Since Singapore tax is assessed later (May 2021) and no TDS, you can’t show proof of tax paid at the time of filing ITR (usually by July 2020).

• You can file a revised return after getting the tax payment certificate from Singapore.

• Along with the revised return, submit Form 67 for claiming foreign tax credit.

4. Declaring Foreign Tax Paid in Form 67

• Form 67 is for declaring foreign income and foreign tax paid.

• You declare the details of income earned abroad, tax paid (or payable), and country details.

• Since tax payment will be after ITR filing deadline, you can file Form 67 when filing a revised return.

5. Time Limit for Filing Form 67 and Revised Return

• Form 67 must be filed before claiming foreign tax credit in the ITR.

• You can file Form 67 along with the original or revised return.

• In this case, best practice is to file original return without claiming foreign credit, then after getting Singapore tax certificate, file revised return with Form 67 and claim relief.

6. Declaring Non-Taxability of Foreign Salary in ITR2 (if applicable)

• If you are not liable to tax Singapore income in India (rare, unless exempt), disclose foreign income as exempt income.

• There’s a column for exempt income and you can mention details in schedule “Exempt Income”.

• You still need to mention foreign income in ITR2 but show it as exempt.

7. Other Declarations or Certificates

• Get a Tax Residency Certificate (TRC) from Singapore authorities to claim relief.

• You may need salary certificate or employer declaration to show salary income breakup.

• Maintain documentation of days of stay, transfer letter, contract of employment, etc.

Summary