20 October 2010
One of my client became resident in India (i.e. his stay in India for FY 2008-09 and FY 2009-10 is more than 183 days). (April to March) He earned salary Income from USA in FY 2008-09 and FY 2009-10 and has paid the following taxes in US. 1. Social Security Tax 2. Federal Tax 3. State Tax (New Jersey and New York) 4. Local Tax
My question is : 1. Whether Salary earned in USA is taxable in India for AY 2009-10 and AY 2010-11? 2. If yes, which of the above taxes paid by him in USA can be claimed in India as withholding Tax ( TDS) 3. To claim above taxes what type of TDS certificate is required ( Please note that USA tax year is calendar year and there is no TDS certificate employee gets like Form 16 in India) In such case how to claim these taxes here in India and on what basis Indian Tax Authority will grant credit for these?
21 October 2010
By virtue of residential status the salary paid in USA is taxable as a resident is liable for global income. However when he has paid taxes on such income, he is entitled o deduction as per DTAA. He can obtain a certificate either from the employer or the Inland Revenue service duly indicating the extent of income that has suffered tax.It need no necessarily be in the manner form 16 is issued in our country. An authenticated certificate ha can testify to the factum of tax payment would do.
18 April 2011
As per ARTICLE 2 of India US Treaty - Taxes covered - for the United States,
the Federal income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, the personal holding company tax, and social security taxes), and the exercise taxes imposed on insurance premiums paid to foreign insurers and with respect to private foundations (hereinafter referred to as United States Tax); provided, however, the Convention shall apply to the exercise taxes imposed on insurance premiums paid to foreign insurers only to the extent that the risks covered by such premiums are not reinsured with a person not entitled to exemption from such taxes under this or any other Convention which applies to these taxes .
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