Tax on foreign income earned and received outside india
This query is : Resolved
10 December 2016
Hello Sir/Madam,
I am being transferred to a Japanese company in Japan for 2 months short term assignment. This Japanese company is a group company of our parent company only but is a totally separate company in Japan.
I am earning my salary from this Japanese company in Japan in my bank account in Japan in Japanese currency.
So I think that my income falls in the category of "Foreign Income" as it is Received outside India and also it is Earned/accrued outside India.
I will be transferring back to India Payroll after completion of 2 months and will transfer the balance in my account after my living expenses in Japan from my Japanese bank account to my Indian Bank account in India.
Because of 2 months transfer, My residence status remains as "Resident Indian"
Now, following are my questions -
1) Am I liable to pay tax on above Foreign income received & earned outside India ?
If yes,
2) Will the tax be on my Total salary income ? or on the amount which I transfer from Japan bank account to my bank account in India ?
3) how much percentage exemption I will get due to double taxation treaty ? because I am also paying certain amount of Income tax in Japan as I am earning in Japan.
4) Is there any exemption on the house rent I paid in Japan ?
(I want to ask this 4th question specifically because in India we have HRA exemption in Tax
also the mandatory leaving expenses like house rent are huge in Japan. So is there any exemption for this ?)
Thanking you in advance,
I am being transferred to a Japanese company in Japan for 2 months short term assignment. This Japanese company is a group company of our parent company only but is a totally separate company in Japan.
I am earning my salary from this Japanese company in Japan in my bank account in Japan in Japanese currency.
So I think that my income falls in the category of "Foreign Income" as it is Received outside India and also it is Earned/accrued outside India.
I will be transferring back to India Payroll after completion of 2 months and will transfer the balance in my account after my living expenses in Japan from my Japanese bank account to my Indian Bank account in India.
Because of 2 months transfer, My residence status remains as "Resident Indian"
Now, following are my questions -
1) Am I liable to pay tax on above Foreign income received & earned outside India ?
If yes,
2) Will the tax be on my Total salary income ? or on the amount which I transfer from Japan bank account to my bank account in India ?
3) how much percentage exemption I will get due to double taxation treaty ? because I am also paying certain amount of Income tax in Japan as I am earning in Japan.
4) Is there any exemption on the house rent I paid in Japan ?
(I want to ask this 4th question specifically because in India we have HRA exemption in Tax
also the mandatory leaving expenses like house rent are huge in Japan. So is there any exemption for this ?)
Thanking you in advance,
10 December 2016
In my views and as per your provided information:
1. Your foriegn salary should not be taxed in india.
2. provided tax has been paid/deducted and other compliance met in Japan.
3. Provided Your salary has been considered as an expense from profit by japan company.
suggestion:
1. Be cautious while filling return & meeting other compliance.
2. Communication with IT department is needful throgh relevant manner.
source: DTAA, INCOME TAX, Judgements.
will be Happy to guide in depth.
rakeshjeswani785@gmail.com
11 December 2016
1 you are liable for tax in India on foreign salary being resident of India.
2 Daily allowance paid apart from salary to meet stay and other expenses is not taxable. Any savings on daily allowance transferred to India is taxable.
3 what ever tax deduction made in Japan can claimed as relief in the return.
4 House rent allowance given in Japan can be claimed as deduction as per It Rules.
2 Daily allowance paid apart from salary to meet stay and other expenses is not taxable. Any savings on daily allowance transferred to India is taxable.
3 what ever tax deduction made in Japan can claimed as relief in the return.
4 House rent allowance given in Japan can be claimed as deduction as per It Rules.
12 December 2016
Thanks a lot Sir for quick replies.
I checked at my Japanese company.
1) Since it is stay for just 2 months, overall income in Japan for the current financial year will be below 0% tax slab. So most probably in Japan, no Income Tax will be charged.
]In such case then I think I will have to pay 30% tax in India since I am in 30% tax slab. Right ?
2) Secondly, I checked the Japan salary slip and there is no HRA component as such in Japan salary. But the fact is I am paying house rent where I live. And I have proper rent agreement and rent receipts with me.
In such case will I get any exemption for House Rent paid ?
Lastly, I think I will need CA Club or your assistance to fill my returns. What should I do for the same ?
I checked at my Japanese company.
1) Since it is stay for just 2 months, overall income in Japan for the current financial year will be below 0% tax slab. So most probably in Japan, no Income Tax will be charged.
]In such case then I think I will have to pay 30% tax in India since I am in 30% tax slab. Right ?
2) Secondly, I checked the Japan salary slip and there is no HRA component as such in Japan salary. But the fact is I am paying house rent where I live. And I have proper rent agreement and rent receipts with me.
In such case will I get any exemption for House Rent paid ?
Lastly, I think I will need CA Club or your assistance to fill my returns. What should I do for the same ?
12 December 2016
1 Yes you are r right.
2 Rs. 5000 per month u/s 80GG can be claimed on rent paid.
3 Call me for filing return. 9443357248.
2 Rs. 5000 per month u/s 80GG can be claimed on rent paid.
3 Call me for filing return. 9443357248.
02 January 2017
I assume you have taken credit of salary income in Japan first and then remitted to India. Please check whether India has a DTAA with Japan. If yes, you can check the Article for "Dependant Personal Services" to see if India exempts your salary income for services rendered in Japan
There are also quite a few court judgements which have upheld the right of the assessee to claim an exemption, if the DTAA allows to do so.
If you do not claim exemption, you will suffer a straight 30% tax on your Japanese earnings. So, there is a case to explore all options before offering Japanese income in Indian tax return.
If at all you claim an exemption, disclose the Japanese income in Indian tax return as exempt income.
Thanks!
There are also quite a few court judgements which have upheld the right of the assessee to claim an exemption, if the DTAA allows to do so.
If you do not claim exemption, you will suffer a straight 30% tax on your Japanese earnings. So, there is a case to explore all options before offering Japanese income in Indian tax return.
If at all you claim an exemption, disclose the Japanese income in Indian tax return as exempt income.
Thanks!
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