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Income tax on foreign(uk) income

Jaganath Rajendra (Engineer) (35 Points)

12 February 2016

Hi,

I am British citizen and OCI card holder. I am resident in India from last four years.I have following income:

Salary from Indian company (I have form 16 issued by my employer for TDS)
Rental income in UK ( immovable property)
Dividend income from UK company

Question is the income raised in UK is within the personal allowance in UK( I understand I can claim personal allowance in UK since I am British citizen).Should I declare and pay tax in India for my income in UK(Rental and dividend) ?

Thanks in advance for answer....

Cheers

Jaganath

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6 Replies

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 13 February 2016

Yes Foreign Income Is Taxable In The Indian Resident Assessee You Have To Pay Tax On This And Whatever Tax You Have Paid In UK Can Calim Relife From Income Tax Liability On Avreage Tax Rate Basis

Jaganath Rajendra (Engineer) (35 Points)
Replied 13 February 2016

Thanks Mehul,

But according to DTAA between UK and India can I still claim my personal tax allowance of the UK?

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 13 February 2016

First include the income earned and taxed in the forieng country along with the income earned in india.

2. Then calculate tax on the Total income Above.

3. Now calculate average rate of tax.

4. Then multiply such rate with the income earned from foreign.country.

5. Deduct tax paid in the foreign country from the tax calculated in step. 4 above, .

Such amount is relief u/ s 90.

1 Like

Jaganath Rajendra (Engineer) (35 Points)
Replied 13 February 2016

Thats very clear now.

What is step 3 , I mean average rate of tax?

CA Mehul Chudasama (Chartered Accountant) (618 Points)
Replied 13 February 2016

Yes Average Rate Of Tax Means Total Tax / Total Income

Jaganath Rajendra (Engineer) (35 Points)
Replied 13 February 2016

Thanks again.

Just one more query is a Limited company in UK considered as foreign asset for a director resident in India according to new income tax laws. I mean even if they don't have any permanent establishment in India. My knowledge is only foreign accounts and foreign immovable house property is only considered as Assets. Please clarify if you know about this...