How to get the with holding tax deducted in Tanzania
This query is : Resolved
15 September 2019
One of my clients is software developer . He did the work for companes in Tanzania. While receiving the payment they deducted withholding Tax @15%. My question is this tax can be claimed as TDS or tax credit under income tax act ? If yes then how ? I know this can't be explain in very short but I really need help. If your are expert in this then I am ready to pay your fees . My mobile is 9909285949. I am from Ahmedabad
15 September 2019
Convert income earned outside India into Indian currency – convert your income in foreign currency into Indian Rupees by using the State Bank of India telegraphic transfer buying rate (TTBR) of the last day of the month before the month in which income is due.
Now, include this income under the head to which it belongs
If TDS has been deducted on your income you are allowed to take credit of such taxes. For this purpose, reference has to be made to the relevant Double Tax Avoidance Agreement (DTAA) of the country where such income has been earned. India has entered into DTAAs with several countries. DTAA makes sure that a taxpayer is not doubly taxed for the income earned outside the country of residence. Since income may be taxed at source i.e. from the place it originated and is also usually taxable in the country of residence, the DTAA makes sure that the taxpayer is not adversely impacted. The taxpayer is also allowed to take credit of TDS deducted.
Taking benefit of a DTAA involves obtaining a Tax Residency Certificate (TRC) that helps identify and certify your tax residency status to make sure the correct DTAA has been applied.
While taking TDS credit, make sure you are referring to the correct DTAA. Under DTAA, there are two methods to claim tax relief – exemption method and tax credit method. By exemption method, income is taxed in one country and exempted in another. In tax credit method, where the income is taxed in both countries, tax relief can be claimed in the country of residence.
Now, include this income under the head to which it belongs
If TDS has been deducted on your income you are allowed to take credit of such taxes. For this purpose, reference has to be made to the relevant Double Tax Avoidance Agreement (DTAA) of the country where such income has been earned. India has entered into DTAAs with several countries. DTAA makes sure that a taxpayer is not doubly taxed for the income earned outside the country of residence. Since income may be taxed at source i.e. from the place it originated and is also usually taxable in the country of residence, the DTAA makes sure that the taxpayer is not adversely impacted. The taxpayer is also allowed to take credit of TDS deducted.
Taking benefit of a DTAA involves obtaining a Tax Residency Certificate (TRC) that helps identify and certify your tax residency status to make sure the correct DTAA has been applied.
While taking TDS credit, make sure you are referring to the correct DTAA. Under DTAA, there are two methods to claim tax relief – exemption method and tax credit method. By exemption method, income is taxed in one country and exempted in another. In tax credit method, where the income is taxed in both countries, tax relief can be claimed in the country of residence.
22 September 2019
Thank you very much sir. I want a expert for this matter. If you are expert in this matter and want to provide paid consultancy in this regard then please give me your contact number. My contact no is 9909285949
28 July 2024
To claim the withholding tax deducted in Tanzania as a tax credit or TDS under the Indian Income Tax Act, follow these detailed steps:
### **1. **Understand Withholding Tax in Tanzania**
- **Nature of Tax:** The withholding tax deducted by Tanzanian companies is an advance tax deducted on payments made to non-residents for services rendered or other income.
- **Rate of Tax:** In your case, the tax rate is 15%.
### **2. **Check the Tax Treaties**
- **Double Taxation Avoidance Agreement (DTAA):** India and Tanzania have a DTAA to avoid double taxation on income. Verify the specific provisions related to withholding tax on services under the DTAA between India and Tanzania.
- **Tax Credit or Exemption:** The DTAA may provide provisions for claiming a tax credit or exemption for taxes paid in Tanzania against your Indian tax liability.
### **3. **Obtain Proof of Tax Deduction**
- **Withholding Tax Certificate:** Ensure that you receive a certificate or statement from the Tanzanian company showing the amount of tax deducted and deposited to the Tanzanian tax authorities. This document is crucial for claiming the credit.
### **4. **File Your Income Tax Return (ITR) in India**
#### **a. **Choose the Correct ITR Form**
- **ITR-3 or ITR-4:** If you are a software developer and have income from a profession, you might need to use ITR-3 or ITR-4, depending on the nature of your income.
#### **b. **Report Foreign Income**
- **Schedule FSI (Foreign Income and Tax Relief):** In the ITR form, report your income earned from Tanzanian clients in Schedule FSI. Provide details about the nature of income and the amount.
- **Schedule TR (Tax Relief):** In this section, provide details of the withholding tax paid in Tanzania. Enter the details of taxes paid and the corresponding amount in the relevant fields.
#### **c. **Claim Tax Credit**
1. **Enter Foreign Tax Credit:**
- In Schedule TR, enter the amount of withholding tax deducted in Tanzania.
- Provide details about the tax deducted, including the certificate number and amount, as per the documents received from the Tanzanian company.
2. **Verify Tax Credit:**
- Ensure that the amount of tax credit claimed does not exceed the tax liability in India.
- The credit should be in accordance with the provisions of the DTAA.
### **5. **Attach Supporting Documents**
- **Tax Certificates:** Attach a copy of the withholding tax certificate from Tanzania.
- **Income Documents:** Provide proof of income earned from Tanzanian clients, such as invoices or contracts.
- **DTAA Certificate:** If applicable, include a certificate indicating that you are claiming tax relief under the DTAA.
### **6. **E-File and Verify Your Return**
- **File Online:** Submit your return online through the [Income Tax e-Filing Portal](https://www.incometax.gov.in/).
- **E-Verify:** Complete the verification process using Aadhaar OTP, EVC through net banking, or any other available method.
### **7. **Additional Steps if Needed**
- **Request for Tax Credit Certificate:** If there are any issues or discrepancies, you may need to request a tax credit certificate from the Tanzanian tax authorities or consult a tax professional in Tanzania for further assistance.
- **Consult a Tax Professional:** For a more detailed and personalized approach, consider consulting a tax professional who specializes in international taxation.
### **Summary**
To summarize, you can claim the withholding tax deducted in Tanzania as a tax credit under the Indian Income Tax Act by reporting the income and the tax deducted in your ITR and claiming relief under the DTAA provisions. Ensure that you maintain all relevant documents and certificates to substantiate your claim.
If you need further assistance, especially with the filing process, it's wise to consult with a tax professional who can offer tailored advice and handle the intricacies of international tax credits.
### **1. **Understand Withholding Tax in Tanzania**
- **Nature of Tax:** The withholding tax deducted by Tanzanian companies is an advance tax deducted on payments made to non-residents for services rendered or other income.
- **Rate of Tax:** In your case, the tax rate is 15%.
### **2. **Check the Tax Treaties**
- **Double Taxation Avoidance Agreement (DTAA):** India and Tanzania have a DTAA to avoid double taxation on income. Verify the specific provisions related to withholding tax on services under the DTAA between India and Tanzania.
- **Tax Credit or Exemption:** The DTAA may provide provisions for claiming a tax credit or exemption for taxes paid in Tanzania against your Indian tax liability.
### **3. **Obtain Proof of Tax Deduction**
- **Withholding Tax Certificate:** Ensure that you receive a certificate or statement from the Tanzanian company showing the amount of tax deducted and deposited to the Tanzanian tax authorities. This document is crucial for claiming the credit.
### **4. **File Your Income Tax Return (ITR) in India**
#### **a. **Choose the Correct ITR Form**
- **ITR-3 or ITR-4:** If you are a software developer and have income from a profession, you might need to use ITR-3 or ITR-4, depending on the nature of your income.
#### **b. **Report Foreign Income**
- **Schedule FSI (Foreign Income and Tax Relief):** In the ITR form, report your income earned from Tanzanian clients in Schedule FSI. Provide details about the nature of income and the amount.
- **Schedule TR (Tax Relief):** In this section, provide details of the withholding tax paid in Tanzania. Enter the details of taxes paid and the corresponding amount in the relevant fields.
#### **c. **Claim Tax Credit**
1. **Enter Foreign Tax Credit:**
- In Schedule TR, enter the amount of withholding tax deducted in Tanzania.
- Provide details about the tax deducted, including the certificate number and amount, as per the documents received from the Tanzanian company.
2. **Verify Tax Credit:**
- Ensure that the amount of tax credit claimed does not exceed the tax liability in India.
- The credit should be in accordance with the provisions of the DTAA.
### **5. **Attach Supporting Documents**
- **Tax Certificates:** Attach a copy of the withholding tax certificate from Tanzania.
- **Income Documents:** Provide proof of income earned from Tanzanian clients, such as invoices or contracts.
- **DTAA Certificate:** If applicable, include a certificate indicating that you are claiming tax relief under the DTAA.
### **6. **E-File and Verify Your Return**
- **File Online:** Submit your return online through the [Income Tax e-Filing Portal](https://www.incometax.gov.in/).
- **E-Verify:** Complete the verification process using Aadhaar OTP, EVC through net banking, or any other available method.
### **7. **Additional Steps if Needed**
- **Request for Tax Credit Certificate:** If there are any issues or discrepancies, you may need to request a tax credit certificate from the Tanzanian tax authorities or consult a tax professional in Tanzania for further assistance.
- **Consult a Tax Professional:** For a more detailed and personalized approach, consider consulting a tax professional who specializes in international taxation.
### **Summary**
To summarize, you can claim the withholding tax deducted in Tanzania as a tax credit under the Indian Income Tax Act by reporting the income and the tax deducted in your ITR and claiming relief under the DTAA provisions. Ensure that you maintain all relevant documents and certificates to substantiate your claim.
If you need further assistance, especially with the filing process, it's wise to consult with a tax professional who can offer tailored advice and handle the intricacies of international tax credits.
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