Income in foreign country

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2012 Hi to All,
If any one is deputed for international assignment on work permit from his company and his resident status is RI (not NRI), then transferring money from foreign earning to Indian account will be added to current year income?
E.g.
An IT guy, worked till Oct in India and moves to Europe for company assignment on work permit, he is paying tax in European country for Europe salary and also tax in India on Indian salary. If he transfers his saving from Europe to India in Dec-Mar, then will that amount be added to his current year India income and liable for income tax?

CA Rahul Jain

CA Rahul Jain (Expert)
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29 July 2012 He worked till Oct in India i.e. more than 182 days and therefore his status is "Resident and Ordinary Resident" and any income earned by such assessee whether in India or Outside India is taxable in the hands of the assessee.

So, Income earned by such assessee in Europe is taxable under the Income Tax of India irrespective of the fact such income was remitted to India or not.

However, he may claim the benefit available under DTAA.

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Querist : Anonymous

Querist : Anonymous (Querist)

29 July 2012 Thanks Rahul for quick response,
Is DTAA also applicable for Italy and could you please explain how to claim the benefit?
I read below link where it says that salary income will only b taxed in earned country, but it is not clear whether money saved from that earning if transferred to India will b taxed and how much taxed.

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_Italy.htm

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Arihanth Jain

Arihanth Jain (Expert)
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01 August 2012 My views on this case:

1. Italy salary shall be fully taxable in India. Even DTAA with Italy does not carry any exemptions here.
2. Being an Resident, global income is taxabile, irrelevant of the fact that the money is transferred to India or not.
3. Taxes borne in Italy can be used as an credit against Indian tax liability.

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Querist : Anonymous

Querist : Anonymous (Querist)

07 August 2012 Thanks Arihanth,
Now question is if my Indian company is paying me salary (or allowance) in Italy and also managing TDS , then whose responsibility is to maintain right deduction and payment of TDS as per DTAA or income tax rule.
My Form16 only covers Indian income, there is no detail about Italy income.
Also your point 3, i.e. credit against Indian Tax liability is not clear. Could you pls explain.
You guys are doing great job, thanks for your support.

Arihanth Jain

Arihanth Jain (Expert)
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09 August 2012 My Views:

1. Liability of right TDS deduction shall be on the Company/Employer.
2. Can't comment without seeing details of form 16 and other related details.
3. As per the DTAA & Sec 90., any taxes paid on Italy income can be used as a setoff against Indian tax liability. For example; Indian income 100, Italy income 40 (out of which taxes paid 15) i.e., total income 140. Assume Indian tax liability on 140 works to 45 then you can deduct 15 paid in Italy. Reason being same income of Italy is taxed twice.

Hope above stands useful.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2012 @Arihanth

I checked with my finance team, and they said
"While in Italy, the company considers the amount paid to you as salary .
However, from India point of view additional amount paid is for like reimbursement of expenses that you incur during your stay in Italy"

Looks like they pay us Indian salary and living allowance, and total amount is shown as salary to Italian gov (not sure).

So I am little confused whether to show additional amount I received in Italy as part of income in India tax details or not?

My Form 16 only covers Indian salary income, nothing for deputation allowance (or Italy salary).

Arihanth Jain

Arihanth Jain (Expert)
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23 August 2012 Please mail me at arihanthjaing@gmail.com
Good day.

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