Tax on income accrue and arise outside
This query is : Resolved
30 May 2009
Please let me know whether salary income for services rendered in Uganda received in India after deduction of Uganda Tax is taxable in India or not . For rendering services in Uganda one has to stay there for more than 183 days in a year
thanks
thanks
30 May 2009
It will depend on his/her residential status under the IT Act for relevant financial year that can be 'resident and ordinary resident', 'resident and not ordinary resident' or 'Non Resident'.
If such income is taxed in India, the assessee will get credit of taxes paid outside India on such income.
If such income is taxed in India, the assessee will get credit of taxes paid outside India on such income.
30 May 2009
agreed with expert
30 May 2009
The explanation (a) to section 6 (c) of Income Tax Act 1961 Deals with the situation in your question. The explanation is reproduced hereunder
Explanation.—In the case of an individual,—
(a) being a citizen of India, who leaves India in any previous year 45[as a member of the crew of an 46Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
Thus if a citizen of India who leaves India for taking up an employment outside India, in his case the time limit of 182 days is inserted in place of 60 days in sub section (c ) of section 6 of IT Act. The impact of this is that the assessee with 365 days in last four assessment is will have to be in India for 183 days in India to become a resident, thus giving an exemption to from taxation here in India for the income earned outside India.
However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) with a country with whom India has a DTAA. Currently India has DTAA’s with more then 75 Countries. India has a DTAA with Uganda. As as per article 15 of that treaty the income of a tax resident of India may be taxed in India for service rendered in Uganda only if the services the individual in present in India for more then 183 days during the year and the expenditure on the salary is borne by a company in India. The provision of the article 15 of Indo-Uganda treaty are reproduced here under.
1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.
From a careful reading of the point no 2 of the article 15 if can be understood that for taxation of income earned by an Indian resident from the service rendered in Uganda may be tax in India also, however only if the condition of presence of less then 183 days in Uganda is met and the two other condition as narrated in 2b and 2c are also met as the word used end in the end of 2a and 2b above signifies that all the three conditions are to be met together.
In your query the salary income will not be taxable in India if the if all the condition is are met. For and complete reply to your query you may provide me more facts.
Explanation.—In the case of an individual,—
(a) being a citizen of India, who leaves India in any previous year 45[as a member of the crew of an 46Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” had been substituted ;
Thus if a citizen of India who leaves India for taking up an employment outside India, in his case the time limit of 182 days is inserted in place of 60 days in sub section (c ) of section 6 of IT Act. The impact of this is that the assessee with 365 days in last four assessment is will have to be in India for 183 days in India to become a resident, thus giving an exemption to from taxation here in India for the income earned outside India.
However As per section 90 of IT Act one can take the benefit of provision of Double taxation Avoidance Agreements ( DTAA) with a country with whom India has a DTAA. Currently India has DTAA’s with more then 75 Countries. India has a DTAA with Uganda. As as per article 15 of that treaty the income of a tax resident of India may be taxed in India for service rendered in Uganda only if the services the individual in present in India for more then 183 days during the year and the expenditure on the salary is borne by a company in India. The provision of the article 15 of Indo-Uganda treaty are reproduced here under.
1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.
From a careful reading of the point no 2 of the article 15 if can be understood that for taxation of income earned by an Indian resident from the service rendered in Uganda may be tax in India also, however only if the condition of presence of less then 183 days in Uganda is met and the two other condition as narrated in 2b and 2c are also met as the word used end in the end of 2a and 2b above signifies that all the three conditions are to be met together.
In your query the salary income will not be taxable in India if the if all the condition is are met. For and complete reply to your query you may provide me more facts.
30 May 2009
The person will be moving out to uganda on employment as such the condition of 183 days will be met and the i or the company does not have permanent establishment in India
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