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Taxabilty..... pls help

Avinash Sharma (IA Consultant) (190 Points)

01 August 2018

Hello All,

Need your help for the below matter.

I am working as an IA consultant. I am based out of Mumbai office but working in Middle East at client location.

During AY 2018-19, I was out of India for more than 182 days and I am a NRI as per Income Tax Act.

I received salary in India as well as perdiem for my stay abroad. I remit the unspent perdiem every month in my NRE bank account.

My query is that whether the unspent perdiem which I have remitted to India, will it be treated as my income as per Sec 10(14) of the act and would be taxable?

Thanks in advance for your help.

Best Regards,

Avinash

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7 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171338 Points)
Replied 02 August 2018

It will be exempt to the amount spent.... but taxable to the amount saved.....

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Avinash Sharma (IA Consultant) (190 Points)
Replied 02 August 2018

Thank you Sir.

Could you please let me know the taxability if I receive the whole amount in foreign exchange out of India.

Br,

Avinash

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171338 Points)
Replied 02 August 2018

per-diem-allowance-taxable-in-india

per-diem-allowances-taxable-india

Taxability of per diem allowance - view

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Saifullah Khalid (Autodidact/Curious ) (633 Points)
Replied 02 August 2018

Dhirajlal Sir , few case laws suggests that " reasonable " per-diem (whether actually spent or not ) will be tax free in hands of the " employee " even an old CBDT circular (related to fringe benefits tax (FBT)/ CIRCULAR NO. 8/2005, DATED 29-8-2005) states " the employees will not be liable to pay income-tax on any surplus accruing to him from such allowance." (though this circular is irrelevant now ) >>

Even if we go by the word " reasonable " then question arises what actually should be considered reasonable ? As per my understanding the Ministry of External affairs (MEA) maintains a list of " per diem " which it pays to its employees when they are on tour to foreign countries ..so can that be taken as reference value in context of " reasonable " per-diem ? whats your view on this ?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171338 Points)
Replied 02 August 2018

Dear Mr. Saifulla Khalid...... rightly pointed out......

But no clear cut specified rule..... It is at the discretion of assessing officer !!!

And the whole matter has nicely been analyzed by Shri Pramod Achuthan (Partner, Ernst & Young LLP, India) And Shri Jagdeep Sadhale (Senior Manager, Tax and regulatory services, Ernst & Young LLP)

in that third link...... Taxability of per diem allowance - A 360 degree view with all the recent judgements of the courts.

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Avinash Sharma (IA Consultant) (190 Points)
Replied 03 August 2018

Dhirajlal Sir and Saifullah Sir

Thank you for the explanation.

However Sir, I would like to state here that I was out of India for more than 182 days. (That makes me a Non Resident)

The perdiem that I got is neither accrued in India nor received in India.

So will the unspend perdiem bought back to India through NRE account be taxable in India, given the fact that I was a Non resident in the PY 2017-18.

I am stuck in the Non Resident point as I am not getting any clarification on this point.

Sorry to bother you.

Br,

Avinash

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Saifullah Khalid (Autodidact/Curious ) (633 Points)
Replied 03 August 2018

Originally posted by : Avinash
	Dhirajlal Sir and Saifullah Sir Thank you for the explanation. However Sir, I would like to state here that I was out of India for more than 182 days. (That makes me a Non Resident) The perdiem that I got is neither accrued in India nor received in India. So will the unspend perdiem bought back to India through NRE account be taxable in India, given the fact that I was a Non resident in the PY 2017-18. I am stuck in the Non Resident point as I am not getting any clarification on this point. Sorry to bother you. Br, Avinash

Dear Avinash , Your specific case (IMO) has two plus points First your status being NRI with " NRE " account and second that the allowance were not remitted to you from Indian susidiary of your company . So in your case tax liabilty (if any ) will be foreign country subject and they should have deducted taxes as per the prevailing law of that country ... the most important point is that the foreign earning you earned abroad will be remitted back by you in your NRE account and holding a NRE account itself proves your status as proper NRI SO IMO your unspent per diem/other earnings are not taxable in India...

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