Itr form

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VIRAG KACHHIA (Querist)
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10 February 2012 Resp Sir

One Individual is Partner in a USA Partnership fim and received income from it in from K-1

which ITR should we file in india and in which section credit of tax paid in USA shall be claimed

He is resident and ordinarily resident in india during the previous year

Waiting for your earliest reply

Thanks

VIRAG KACHHIA

VIRAG KACHHIA (Querist)
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03 April 2012 got the answer

VIRAG KACHHIA

VIRAG KACHHIA (Querist)
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01 December 2014 Waiting for your expert opinion

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 For an individual who is a partner in a U.S. partnership firm and has received income from it in the form of a K-1 statement, the correct procedure for filing an Income Tax Return (ITR) in India is as follows:

### ITR Form to Use

1. **Form to File:**
- **ITR-2**: Since the individual is a resident and ordinarily resident (ROR) in India and has income from a foreign partnership firm, they should file **ITR-2**. This form is used for individuals and Hindu Undivided Families (HUFs) who have income from various sources, including foreign income and assets.

### Reporting Foreign Income

1. **Income Reporting:**
- **Foreign Income**: The income received from the U.S. partnership firm should be reported under the appropriate section in ITR-2. You need to report the income received from the partnership under "Schedule FSI" (Foreign Source Income) and "Schedule TR" (Tax Relief).

2. **Schedule FSI (Foreign Source Income):**
- **Part A (Details of Income from Foreign Sources)**: Enter the income from the U.S. partnership firm in this section.
- **Part B (Details of Taxes Paid on Foreign Income)**: Mention any taxes that were paid in the U.S. on this income.

### Claiming Tax Credit

1. **Schedule TR (Tax Relief):**
- **Section 91 (Credit of Tax Paid to Foreign Country)**: If the taxes have been paid in the U.S., you can claim a credit for taxes paid abroad to avoid double taxation. This credit is allowed under Section 91 of the Income Tax Act.
- **Details to Fill**: You should provide the details of the taxes paid in the U.S. and the income received. The credit is generally limited to the amount of Indian tax payable on the same income.

### Summary of Steps

1. **File ITR-2**: Use ITR-2 for reporting foreign income.
2. **Report Foreign Income**: Use "Schedule FSI" to report income from the U.S. partnership firm.
3. **Claim Tax Credit**: Use "Schedule TR" to claim a tax credit for taxes paid in the U.S. under Section 91.

### Additional Points

- **Conversion to INR**: Ensure that foreign income and taxes paid are converted into Indian Rupees (INR) using the appropriate exchange rates.
- **Supporting Documents**: Keep all supporting documents, including the K-1 statement and proof of taxes paid in the U.S., in case of any queries or for record-keeping purposes.

Filing the ITR correctly ensures compliance with Indian tax laws and prevents issues related to double taxation. If you need further assistance, consulting a tax professional experienced in handling international tax matters might be beneficial.