FOREIGN INCOME

This query is : Resolved

CA Nikita Gadekar (Querist)
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12 July 2016 Assessee received some commision from a foreign university for providing IT services. No TDS has been deducted on that amount. Other than that assessee is having salary income. How this foreign income should be shown and taxed?

CA Nikita Gadekar

CA Nikita Gadekar (Querist)
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12 July 2016 Shall we include that as other sources income and pay the tax accordingly?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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25 July 2024 Yes, the commission received from the foreign university for providing IT services should be included in the income tax return under the head "Income from Other Sources" if it is not related to any business or profession carried out by the assessee. Here’s how you should handle it:

### 1. Reporting the Foreign Income:

- **Nature of Income:** The commission received from the foreign university is considered income earned from providing services outside India.
- **Head of Income:** Since it is not salary income and no TDS (Tax Deducted at Source) has been deducted, it should be reported under the head "Income from Other Sources" in the Income Tax Return (ITR).

### 2. Taxation of Foreign Income:

- **Taxation Rate:** The income will be taxed at the applicable slab rates for individual taxpayers under the Income Tax Act, 1961.
- **Tax Calculation:** Aggregate the foreign income (commission received) with other income sources such as salary to compute the total taxable income.
- **Applicable Deductions:** Deductions under Chapter VI-A (like Section 80C, 80D, etc.) can be claimed if eligible.

### 3. Compliance Requirements:

- **Reporting Requirements:** Ensure accurate reporting of the foreign income in the ITR. Use the Foreign Income Schedule (if applicable in the ITR form being used) to provide details of the foreign income.
- **Tax Payment:** Compute the tax liability on the total income including foreign income and pay the taxes due.
- **Disclosure:** If the foreign income exceeds INR 10 lakhs, additional disclosure in Schedule FA may be required in the ITR.

### 4. Documentation:

- **Supporting Documents:** Maintain records of the contract or agreement with the foreign university, invoices raised, proof of receipt of income (like bank statements), and any correspondence related to the service provided.

### Conclusion:

It’s essential to accurately report and pay taxes on foreign income received to comply with Indian tax laws. If in doubt, consulting with a qualified chartered accountant or tax advisor would ensure proper compliance and help optimize tax planning based on individual circumstances.

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