Dtaa

This query is : Resolved

Amit Kanodia (Querist)
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21 March 2012 Dear sirs.

If possiblr, pls analyse as per Indian IT Act.
Income accrued and received in USA and remitted India through NRE Account.

Calculation of global income:
Please find attached file and we will discuss when you have time.

Certain doubts:
1) I paid 4 types of taxes- Federal, State, Medicare and Social Security Taxes.

I know relief u/s 90 gives credit only for federal if DTAA exist but I read in 1 of the blog that relief u/s 91 is given if DTAA does not exist and it covers state taxes also.
US and India have DTAA hence Sec 90 will be applicable and Sec 91 is not applicable.

1.However, If 91 is more beneficial, it prevails over 90. Hence, both federal and state taxes are allowed. (Need to confirm)
2. Does Sec 91 covers Medicare and social security taxes also? ( Need to confirm)
Company Taxable Earnings Federal tax Social Security tax Medicare Tax State Taxes Month USD:INR USD:INR
USA TCS April2011 4,640.00 450.00 200.00 63.00 210.00 Apr'11 44.3954 44.3954
USA Deloitte-Nov,Dec11 14,250.00 1,776.00 599.00 207.00 730.00 May'11 44.9377 In India
USA Deloitte-Mar12 29,366.00 3,966.00 1,234.00 426.00 1,577.00 Jun'11 44.8426
Total USA Income for 2011-2012(Global Income in USD) 48,256.00 6,192.00 2,033.00 696.00 2,517.00 Jul'11 44.4151
Tax rate 12.832% 4.213% 1.442% 5.216% Aug'11 45.3650
Exg rate USD:INR 47.8728 47.8728 47.8728 47.8728 47.8728 Sep'11 47.6585
Global Income and taxes in INR 2,310,149.84 296,428.38 97,325.40 33,319.47 120,495.84 Oct'11 49.2856
Indian Taxable Salary after all deductions and exemptions from India TCS 135,000.00 Nov'11 50.7911 50.7911
Interest income in India from a loan to a pvt company 24,000.00 Dec'11 52.5228 52.5228
Total Income 2,469,149.84 Jan'12 51.1976 51.1976
Tax up to 8 lacs 92,000.00 Feb'12 49.1978 49.1978
Tax on balance 500,744.95 Mar'12 49.8639 49.8639
Total Tax Liability 592,744.95 Avg Rate 47.8728 49.6614
Effective Tax Rate 24.006%
Relief u/Sec 90 DTAA (only federal tax) 296,428.38
Relief u/Sec 91 (State Tax) IF DTAA is present, relief u/s 91 cannot be claimed however, if it is more beneficial then state taxes paid is also relieved 120,495.84
TDS in India by TCS 17,000.00
TDS on interest income earned 2,400.00
Net Liability 156,420.74

Scenario 2: if medicare tax and social security taxes are also relieved u/s 91
Total Income 2,469,149.84
Tax up to 8 lacs 92,000.00
Tax above 8 lacs 500,744.95
Total Tax Liability 592,744.95
Effective Tax Rate 24.006%
Relief u/Sec 90 DTAA (only federal tax) 296,428.38
Relief u/ Sec 91 (State Tax +Medicare tax+Social Security Tax) 251,140.71
TDS in India by TCS 17,000.00
Net Liability 28,175.86