Income earned inside/ouside India from Foreign Employer

This query is : Resolved

CA Shashikant Lonikar (Querist)
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28 January 2011 A Foreign Company (FC) wish to establish a manufacturing facility in India. The FC accordingly employed 8 people from various functions and posted them in foreign company for 4-5 months. Salary was paid in foreign currency after deducting withholding tax @ rate applicable in Foreign Country and the employees bought that salary to India after converting in to $. Dollars subsequently converted in to INR through authorised agents.The foreign country is having DTAA with India.

1.Whether the employees will get benefit of Income tax paid in Foreign Country?
2.Is it legal to bring such foreign currency in India?
3. Can the employees transfer this salary from foreign country to their India account?
4. Under which head this income will be shown while filing the return of Income?
5. If the employee declares this income as professional income to avoid excess tax payment in India, will it make any difference?
Looking forward for your expert opinion on each of the above questions.
Thanks

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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29 January 2011 1. Yes,depending on the relavent Article in the DTAA.
2. Yes no issues under FEMA.
3. Yes.
4. Salary.
5. There shall be an employment letter and also the employee must be earning the income only from one source ie. employer hence this proposition seems difficult to sustain.

Anuj
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