shalini (CA) (525 Points)
06 June 2016My client is a resident in India. He earned salary for 3 months in Singapore and have paid taxes there. India has DTAA with Singapore and give relief by tax deduction (not by tax credit) . Does it mean that I should not include Singapore income in total income?
Thanks
SUPRIYA
(PRACTICE)
(853 Points)
Replied 06 June 2016
According to me, if your client is resident in India than you should show his forien income ( after conversion) and claim relief u/s 90 for tax paid in other country.
CA Harshal Totla
(Chartered Accountant)
(2229 Points)
Replied 06 June 2016
shalini
(CA)
(525 Points)
Replied 06 June 2016
As far as I know method of relief suggested by Harshal is Tax credit method whereas India gives relief by tax deductions method as per DTAA with Singapore. I am confused. Please help.
prachi pohani
(student)
(105 Points)
Replied 06 June 2016
CA Harshal Totla
(Chartered Accountant)
(2229 Points)
Replied 06 June 2016
Ms.Shalini just checked article 15 of dtaa between India and Singapore, salary is taxable only in the contracting state i.e.Singapore in this case,so you are correct.
And Ms.Prachi just to correct you that unilateral relief is governed by section 91.
Soham
(Learning )
(534 Points)
Replied 07 June 2016
Club Income earned in Foreign Country in INR - Compute Tax Liability as per Indian Tax Law -- Claim relief u/s 91
shalini
(CA)
(525 Points)
Replied 07 June 2016
I just checked that my client did not have to pay any taxes there on Singapore income because in Singapore short term employment is exempted. Does he has to pay taxes on this Singapore income in India?
Soham
(Learning )
(534 Points)
Replied 07 June 2016
Basic priciple of DTAA is to avoid single income to be taxed twice . I think if someone (Resident) has not paid any tax on foreign income in foreign , whole of his income wpuld be taxed as per indian tax laws without claiming relief u/s 91.
Soham
(Learning )
(534 Points)
Replied 07 June 2016
Countries with which no agreement exists.
7491. (1) If any person who is resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 90 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income75 at the Indian rate of tax or the rate of tax of the said country, whichever is the lower, or at the Indian rate of tax if both the rates are equal.
(2) If any person who is resident in India in any previous year proves that in respect of his income which accrued or arose to him during that previous year in Pakistan he has paid in that country, by deduction or otherwise, tax payable to the Government under any law for the time being in force in that country relating to taxation of agricultural income, he shall be entitled to a deduction from the Indian income-tax payable by him—
(a) of the amount of the tax paid in Pakistan under any law aforesaid on such income which is liable to tax under this Act also; or
(b) of a sum calculated on that income at the Indian rate of tax;
whichever is less.
(3) If any non-resident person is assessed on his share in the income of a registered firm assessed as resident in India in any previous year and such share includes any income accruing or arising outside India during that previous year (and which is not deemed to accrue or arise in India) in a country with which there is no agreement under section 90 for the relief or avoidance of double taxation and he proves that he has paid income-tax by deduction or otherwise under the law in force in that country in respect of the income so included he shall be entitled to a deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income so included at the Indian rate of tax or the rate of tax of the said country, whichever is the lower, or at the Indian rate of tax if both the rates are equal.
Explanation.—In this section,—
(i) the expression “Indian income-tax” means income-tax 76[***] charged in accordance with the provisions of this Act;
(ii) the expression “Indian rate of tax” means the rate determined by dividing the amount of Indian income-tax after deduction of any relief due under the provisions of this Act but before deduction of any relief due under this 77[Chapter], by the total income;
(iii) the expression “rate of tax of the said country” means income-tax and super-tax actually paid in the said country in accordance with the corresponding laws in force in the said country after deduction of all relief due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country;
(iv) the expression “income-tax” in relation to any country includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country.
shalini
(CA)
(525 Points)
Replied 07 June 2016
I have one more question. In Singapore year of assessment is calendar year (jan-dec) and my client is exempted for the month of DEC 2015. But for the month of Jan-March 2016 he will pay the taxes in Singapore in April 2017. So how can I claim tax relief for Jan-March if he has not paid but if I do not claim the relief then he will have to pay double taxes as now in India and next year in Singapore.
Thanks a lot for helping me. I really appreciate it.
CAclubindia
