Is us salary income taxable in india for r&or?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2012 For PY 2011-12, I am a Resident & Ordinary Resident.

I was in US from 1st Jan'11 to 10th Aug'11 and earned Salary from US employer. I have paid my taxes on this Income in US.

I am in India from 11th Aug'11 till date and earned Salary from Indian employer. I have paid my taxes on this Income in India.

Question:
Is my US Salary Income (from April'11 to Aug'11) taxable in India?

Please consider these Reference details:
Article in ICAI Journal: http://220.227.161.86/23576august2011journal_106.pdf
Cases: AAR-287 ITR 462-british gas & 294 ITR 177 AAR
DTAA with US: http://law.incometaxindia.gov.in/DIT/File_opener.aspx?fn=http://law.incometaxindia.gov.in/Directtaxlaws/cbdt/dta/A1_USA.htm

Amol S Joglekar

Amol S Joglekar (Expert)
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20 July 2012 As per the DTAA, if taxes are paid at USA, you need not add the income to Indian Income Tax. So your USA income is not taxable in India; since you have paid the USA fedral taxes on this USA salary income. (I hope your contracting state is INDIA and service provided state is USA)

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Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2012 Dear All,

My Tax consultant's opinion is that global income is taxable for Resident & Ordinary Resident.

Hence according to him US salary is taxable in India.

Please guide & share some relevant case laws which suggests that US salary need not be taxed in India for R&OR if it is taxed in US.

Appreciate all your help.

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Amol S Joglekar

Amol S Joglekar (Expert)
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21 July 2012 US salary is taxable SUBJECT to DTAA (Double Taxation Avoidance Agreement) between INDIA and USA. Request you to go through DTAA. (Available on incometaxindia.gov.in

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2012 This is my understanding of DTAA rules & accordingly my US salary should not be taxed in India.

Based on Article 4, since I am a resident of both India & US, I will be considered resident of India due to my permanent base in India.

(F.y.i.: I have added 'US' / 'India' to help read below rules)

ARTICLE 16 - Dependent personal services - 1. Subject to the provisions of Articles 17 (Directors’ Fees), 18 (Income Earned by Entertainers and Athletes), 19 (Remuneration and Pensions in respect of Government Service), 20 (Private Pensions, Annuities, Alimony and Child Support), 21 (Payments received by Students and Apprentices) and 22 (Payments received by Professors, Teachers and Research Scholars), salaries, wages and other similar remuneration derived by a resident of a Contracting State (India) in respect of an employment (in India) shall be taxable only in that State (India) unless the employment is exercised in the other Contracting State (US). If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State (US).

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State (India) in respect of an employment exercised in the other Contracting State (US) shall be taxable only in the first-mentioned State, (India) if :

(a) the recipient is present in the other State (US) for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year ;

(This condition is not fulfilled, as I was in US for more than 183 days based on US calendar-taxable year.)

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State ; and

(This condition is not fulfilled, as Salary was paid by a resident of US)

(c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State.

(This condition is not fulfilled, as remuneration is borne by PE which employer has in US)

Amol S Joglekar

Amol S Joglekar (Expert)
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23 July 2012 If you satisfy the conditions laid down in DTAA, your USA salary is not taxable in INDIA. Both of us are saying the same thing. Thanks.

Abhinav

Abhinav (Expert)
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06 November 2016 In this case, the salary received for employment in USA may be taxable in India. The actual facts need to be seen and correlated with the conditions mentioned in DTAA, before coming to a conclusion. Thanks!