Foreign income taxation

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Vikram

26 Points Joined March 2014

Hello,

I have foreign income in AY 2012-13 that I want to file taxes for (yes I know I am late by 8 months and will owe 1% penalty per month after July 2013 which I plan to pay).

However, I have transferred the money into India over time... some of it in AY 2012-13 and some of it in AY 2013-14. Some of it is still in foreign account. So, how should I calculate the taxable amount in rupees? If I file taxes based on the date I got the foreign currency, then I would have to use an old exchange rate for the entire amount. Whereas, if I file taxes based on when I moved the money into India then the taxation will be split across 3 different AYs and the marginal rate will be favorable to me. That does not seem right either. So, what is the correct way to report income (in rupees)?

And, what documents do I need to show? Is it sufficient to show my Indian bank statement showing all remittances? I don't have any bills/invoices, etc. And, if I show bank statement, then I would not have all the remittances in the same year as in which the income was earned, so I am confused what the right way is.

It would be easiest for me to report income based on when it comes into my Indian bank account, but is that correct when the income was earned in a different year?

Thanks.

Replies (2)

Manoj Mehta

Head Of Department (Accounts & Finance)

1479 Points Joined March 2009

Dear sir, firstly if you are a resident then all income earned will be taxable in india in the assessment year in which it is earned. So if you earned £ then change it to ₹ and calculate your gross total income. Take the exchange rate of that day on which actually earned that income. regards

Vikram

26 Points Joined March 2014

Yes, I am a resident. I hope it will be ok to use the exchange rate as of the date of income (as opposed to date of remittance). I'm still not certain about it and the rupee has moved down a lot between the date of income and date of remittance. Is there a section in the income tax laws that describes this rule? Also, do I need to show any documents for the income? They are all informal consulting assignments so unfortunately I don't have any bills. Thanks for your response and help.