25 May 2023
Hi, I'm working for a foreign company based in Finland and receiving salary to my Indian Bank. I'm a Indian resident. I didn't pay any tax to the particular foreign country - Finland. I'm confused with ITR 2 - Schedule FA vs FSI
Should I need to fill both? Can I get 50000 std deduction?
My tax auditor saying i won't get 50000 deduction b/c my company is not registered in India. And he is not giving importance to schedule fsi! He is filling only schedule FA in some software!
11 July 2024
If you are working for a foreign company based in Finland and receiving salary in your Indian bank account, here’s how you should approach your income tax return (ITR) filing in India:
1. **Income Tax Return Form**: Since you are an individual receiving salary income from a foreign employer and are a resident of India, you should generally file ITR-2 if you have income from salary and foreign assets or foreign income to report.
2. **Schedule FA**: This schedule is for reporting foreign assets and income outside India. If you have foreign assets such as bank accounts or investments, or if you have any foreign income, you need to fill out Schedule FA. This schedule is essential to declare your foreign income earned in Finland.
3. **Schedule FSI**: Schedule FSI is for reporting income from outside India, including details of foreign salary income, tax deducted in the foreign country, and any foreign taxes paid. Since you are receiving salary from a foreign employer (in Finland), you should definitely fill out Schedule FSI to report this income. This schedule helps in claiming credit for taxes paid abroad and avoiding double taxation.
4. **Standard Deduction**: As per Indian tax laws, individuals are eligible for a standard deduction of up to ₹50,000 on salary income. This deduction is available irrespective of whether your employer is Indian or foreign. Since you are receiving salary income in India, you should be eligible for this deduction.
5. **Tax Advisor’s Perspective**: It’s crucial to ensure that your tax advisor correctly understands the implications of your employment with a foreign company. Sometimes, tax advisors may have different interpretations or approaches, but the standard deduction should generally apply to your salary income in India, regardless of your employer's location.
6. **Software for Filing**: Ensure that the software your tax advisor is using supports reporting of foreign income and foreign tax credits. Schedule FSI is specifically designed to report foreign salary income and claim tax credit for taxes paid abroad.
In summary, for your situation: - You should fill out both Schedule FA (if applicable for foreign assets) and Schedule FSI (for foreign salary income). - You are eligible for the ₹50,000 standard deduction on your salary income received in India. - Verify with your tax advisor that the software used supports accurate reporting of foreign income and taxes paid abroad.
If there are discrepancies or if you have further doubts, consulting with a tax expert specializing in international taxation or a certified chartered accountant can provide precise guidance tailored to your specific circumstances.
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