Taxation of foreign salary of an ordinary resident
This query is : Resolved
30 July 2017
how to include the foreign salary income of an ordinary resident of india & how to take credit of tax deducted in such foreign country??
30 July 2017
Schedule FSI and Schedule TR in Income tax return for informing foreign income and taking tax credit
30 July 2017
I meant at which exchange rate i have to convert the income & the tax deducted by that foreign country
30 July 2017
https://cleartax.in/s/claim-tax-credit-on-foreign-income-of-resident-indian
30 July 2017
"I meant at which exchange rate i have to convert the income & the tax deducted by that foreign country"
Normally for the amount of salary received during the year you would take the amount exactly as per Foreign Inward Remittance Certificate. If there is any salary due that has not reached your bank account before March 31, then take the TT buying rate of SBI as on 31/3 of the year for pending amount. As far as the tax is concerned, since the amount is not received by you, take the SBI TT Buying Rate as on date of the TDS deduction as per proof the witholder of tax will provide to you. If your tax has been with held before March 31 but certificate date is after March 31, then take the TT Rate as on March 31.
The above is based on how normally business income is treated or interest income is treated and assuming that accounts are on mercantile basis. However, better is you consult a professional as you will have more complications with accounting years not being the same in both countries. Sometime you may not get a certificate of with holding tax before due date of the return and you will have to rely on other documents.
Normally for the amount of salary received during the year you would take the amount exactly as per Foreign Inward Remittance Certificate. If there is any salary due that has not reached your bank account before March 31, then take the TT buying rate of SBI as on 31/3 of the year for pending amount. As far as the tax is concerned, since the amount is not received by you, take the SBI TT Buying Rate as on date of the TDS deduction as per proof the witholder of tax will provide to you. If your tax has been with held before March 31 but certificate date is after March 31, then take the TT Rate as on March 31.
The above is based on how normally business income is treated or interest income is treated and assuming that accounts are on mercantile basis. However, better is you consult a professional as you will have more complications with accounting years not being the same in both countries. Sometime you may not get a certificate of with holding tax before due date of the return and you will have to rely on other documents.
30 July 2017
sir, i have gone through the clear tax link & also gone through the above answer
Here i am stating you the facts of the case:
The assessee was relocated on employment to a foreign country wef December.
the assessee has not sent even a single paisa to India during FY 16-17; now the question arises at what exchange rate does the income recieived in fc is req to be converted to inr
weather transport allowance received by the assessee in fc continue to remain exempt in india to the extent of 1600 pm & what rate of exchange needs to be used while computing the tax relief wrt the tax deducted in such fc.
kindly also share the source from where i can get the rates
Thank you for your valuable time
30 July 2017
You will have to take the TT Rate of SBI as on date of each receipt if the assessee is abroad. If tax rate deducted of other country is higher than the tax that would have suffered in India, you have your relief and dont deposit any more tax in India. If lower or nil, you will have to deposit the difference of the two taxes in India. Use the TT buying rate of SBI as on date of receipt in foreign country or the nearest earlier date in case that date is a Sunday countries like Dubai are open on Sunday and on Sundays we have no choice but to use the immediately closed rate.
30 July 2017
SBI will give you historical rate as our Income Tax Department usually uses SBI TT Buying Rate for our incomes and TT Selling Rate when we credit income to foreigner for purpose of section 195
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