CA
397 Points
Joined February 2011
From the facts mentioned above, I assume employee was > 181 days in India during FY 2015-16 and he qualifies as "resident of India". In such a case, it is undisputed that full income (India + USA) need to be offered to tax in India. Respective schedules for FSI and FA need to be also filled for Indian tax return.
As regards other country (assuming USA as you've mentioned FY being Jan-Dec) - it needs to be seen whether the three conditions in respective Article in India USA DTAA are satisfied. If yes, USA income can be claimed as fully exempt in US tax return quoting the article and tax withheld can be claimed as refund. If not, USA income need to be fully disclosed in USA and in the Indian tax return, federal income tax paid in USA can be claimed as tax credit.
This is my personal interpretation of tax provisions and DTAA and not to be taken as tax advice. Please consult a local CA/CPA with detailed facts.
Thanks!