Income tax on foreign allowance received in india

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Harkirat Singh kaler (Querist)
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01 September 2012 Hello Dear Members,
I Have a query, A person which was working with Indian Govt has been transferred to Tehran under same employment by organisation to give services there. He Remained there for three years in which he was receiving salary after ''SLAB DEDUCTION'' SO, he was not liable to pay any taxes in India.

Now he has returned to India From past two years and in the mean time he has received his due foreign allowance in India which is for the period relating to past services rendered in abroad.

Now kindly tell me that:
1) Is this foreign allowance taxable in India ?
2) What do we mean by Slab deduction?

Thnaking You all in advance.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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02 September 2012 As per my understanding sec. 9(1)(iii) provides for income received by an individual from indian Government shall be taxable in india even if services are rendered outside India.

So kindly check your contention that "he ws not liable to pay taxes in India".

Anuj
femaquery@gmail.com

Harkirat Singh kaler

Harkirat Singh kaler (Querist)
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07 September 2012 Dear Sir Thanx for your reply,
The statement that "He is not liable to Pay any taxes in India" is written on his form 16.
Upto my knowledge there is a DTAA agreement signed with foreign govt. by Indian Govt that is why this is the case.
And Foreign allowances also a part of salary and this salary relates to past services rendered abroad. So Logical I Think this will not form any part of income in India.
Kindly Correct me if I am Lacking facts somewhere.

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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31 July 2024 Based on your query, here's how the foreign allowance received in India is treated for tax purposes:

### 1. **Taxability of Foreign Allowance:**

**Foreign Allowance:**
- **For Services Rendered Abroad:** If the foreign allowance pertains to services rendered abroad, and the individual was not liable to pay taxes in India during their stay abroad due to the provisions of the Double Taxation Avoidance Agreement (DTAA), then it typically means that the income was not subject to Indian taxation while the individual was abroad.
- **On Return to India:** Generally, if the foreign allowance was received for services rendered while the individual was abroad, and the tax has been settled in the country where the services were rendered, it may not be subject to tax again in India. However, this exemption might be valid if it falls under the provisions of DTAA and provided the income was already taxed in the foreign country.

**DTAA Agreement:**
- **India and Iran DTAA:** India and Iran have a DTAA which helps avoid double taxation of income. If the income was taxed in Iran or falls under the exempt category as per the DTAA, it should generally not be taxed again in India.

**Taxability Considerations:**
- The foreign allowance received in India for past services should be analyzed to determine whether it’s considered income in India. If it was not previously taxed and falls within the DTAA provisions, it may not be taxable.
- **Income Received in India:** If the allowance is being received in India and pertains to income earned while abroad, it is essential to check whether this falls under any specific provision of the tax laws regarding foreign income.

### 2. **Slab Deduction:**

**Slab Deduction:**
- The term “slab deduction” might be referring to the deductions or tax benefits available under different tax slabs or brackets as per income tax laws. In India, income tax is levied based on slabs, meaning different income ranges are taxed at different rates.
- **Deducting at Source:** It could also refer to the deductions made at source before paying the salary, which could include allowances, perquisites, and other components. However, this is less common as a term.

### Summary:

1. **Foreign Allowance Taxability:**
- If the allowance is related to services rendered abroad and taxes were paid in the foreign country, and if it is covered under the DTAA, it generally should not be taxed again in India. Confirming the specifics with a tax consultant familiar with both Indian and international tax laws would be prudent.

2. **Slab Deduction:**
- Likely refers to deductions or adjustments according to income tax slabs, but it would be advisable to clarify this term with respect to the specific context it was used in.

To ensure compliance and avoid any potential issues, consulting with a tax professional or advisor who can consider the complete context and specifics of the DTAA agreement and Indian tax laws is recommended.