Directors salary
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 October 2013
is directors salary earned in dubai and same money is brought in india .is it liable for tax.directors are residents of india
26 October 2013
THE SALARY RECEIVED BY DIRECTORS (RESIDENTS OF INDIA) IS TAXABLE IN INDIA UNDER SECTION 9 OF INCOME TAX, ACT.
FOREIGN INCOME IS NOT TAXABLE IN THE HANDS OF A NON-RESIDENT IN INDIA. FOR RESIDENT (IN CASE OF FIRM, ASSOCIATION OF PERSONS, COMPANY AND EVERY OTHER PERSON) OR RESIDENT & ORDINARILY RESIDENT (IN CASE OF AN INDIVIDUAL OR AN HUF), FOREIGN INCOME IS ALWAYS TAXABLE.
FOREIGN INCOME IS NOT TAXABLE IN THE HANDS OF A NON-RESIDENT IN INDIA. FOR RESIDENT (IN CASE OF FIRM, ASSOCIATION OF PERSONS, COMPANY AND EVERY OTHER PERSON) OR RESIDENT & ORDINARILY RESIDENT (IN CASE OF AN INDIVIDUAL OR AN HUF), FOREIGN INCOME IS ALWAYS TAXABLE.
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 November 2013
even if they stay abroad for more than 184 days
21 July 2024
If directors are residents of India as per the provisions of the Income Tax Act, their global income is taxable in India irrespective of where it is earned or received. Here are the key points to consider regarding the taxation of directors' salary earned abroad and brought into India:
1. **Residential Status**: According to Indian tax laws, an individual is considered a resident if they satisfy any of the following conditions:
- They are in India for 182 days or more in the relevant financial year.
- They are in India for 60 days or more in the relevant financial year and 365 days or more in the four preceding years.
If the directors qualify as residents based on these criteria, their global income, including salary earned abroad, is taxable in India.
2. **Taxation of Salary Earned Abroad**:
- **Tax Liability**: Salary earned abroad by Indian residents is taxable in India. It doesn't matter whether the salary is paid into an Indian or foreign bank account.
- **Double Taxation Relief**: India has Double Taxation Avoidance Agreements (DTAA) with many countries to avoid double taxation on the same income. If a DTAA applies, the tax paid abroad may be credited against the tax payable in India.
3. **183 Days Rule**: There is a misconception that if an individual stays outside India for more than 183 days in a financial year, they are exempt from Indian tax. However, this is not correct for Indian residents. Indian residents are taxed on their global income, regardless of their physical presence in India for the year.
4. **Foreign Tax Credits**: Indian residents can claim a credit for taxes paid abroad on their foreign income against their Indian tax liability, subject to the rules and limits specified under the Income Tax Act.
### Conclusion:
Directors who are residents of India are subject to Indian tax laws on their global income, including salary earned abroad. Therefore, if directors earn salary in Dubai and bring that money into India, it is taxable in India. They should report this income in their Indian income tax return and pay tax accordingly. It's advisable for the directors to consult with a tax advisor who can provide personalized advice based on their specific circumstances and any applicable DTAA provisions.
1. **Residential Status**: According to Indian tax laws, an individual is considered a resident if they satisfy any of the following conditions:
- They are in India for 182 days or more in the relevant financial year.
- They are in India for 60 days or more in the relevant financial year and 365 days or more in the four preceding years.
If the directors qualify as residents based on these criteria, their global income, including salary earned abroad, is taxable in India.
2. **Taxation of Salary Earned Abroad**:
- **Tax Liability**: Salary earned abroad by Indian residents is taxable in India. It doesn't matter whether the salary is paid into an Indian or foreign bank account.
- **Double Taxation Relief**: India has Double Taxation Avoidance Agreements (DTAA) with many countries to avoid double taxation on the same income. If a DTAA applies, the tax paid abroad may be credited against the tax payable in India.
3. **183 Days Rule**: There is a misconception that if an individual stays outside India for more than 183 days in a financial year, they are exempt from Indian tax. However, this is not correct for Indian residents. Indian residents are taxed on their global income, regardless of their physical presence in India for the year.
4. **Foreign Tax Credits**: Indian residents can claim a credit for taxes paid abroad on their foreign income against their Indian tax liability, subject to the rules and limits specified under the Income Tax Act.
### Conclusion:
Directors who are residents of India are subject to Indian tax laws on their global income, including salary earned abroad. Therefore, if directors earn salary in Dubai and bring that money into India, it is taxable in India. They should report this income in their Indian income tax return and pay tax accordingly. It's advisable for the directors to consult with a tax advisor who can provide personalized advice based on their specific circumstances and any applicable DTAA provisions.
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