REPORTING FOREIGN INCOME

This query is : Resolved

C.S.MADHURANATH

C.S.MADHURANATH (Querist)
Follow

26 September 2025 SIR, MY FRIEND WHO IS A RESIDENT AS PER INCOME TAX ACT, HAS SOME RENTAL AND INTEREST INCOMNE FROM AUSTRALIA. SINCE AUSTRALIA FOLLOWS JULY TO JUNE OF EVERY YEAR AS TAX YEAR, FOR CALCULATING AND FOR CLAIMING TAX CREDIT, FOR AY 2025-26, WHICH PERIOD TO BE CONSIDERED OF AUSTRALIAN INCOME.
IN OTHERWORDS, WHETHER 1/7/2023-30/6/2024 OR 1/7/2024 TO 30/06/2025? THANKS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

26 September 2025 For AY 2025-26 (Assessment Year 2025-26) in India, foreign income—including rental and interest income from Australia—must be reported as part of the total income of a resident as per the Indian Income Tax Act. Since Australia follows a July-to-June tax year, the relevant period of income to be considered for AY 2025-26 in India is the income earned between 1 April 2024 and 31 March 2025, not the Australian financial year (which is 1 July 2024 to 30 June 2025).

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

26 September 2025 For Indian tax purposes (AY 2025-26), report the Australian income accrued or received during 1 April 2024 to 31 March 2025.

This means you must extract and compute the rent and interest income corresponding to this exact period from your Australian financial records.

For foreign tax credit (FTC), claim any taxes paid to Australia on the income for the period 1 April 2024 to 31 March 2025, even if the Australian tax year is different.

You will need to provide supporting documentation (such as foreign tax deduction statements and Form 67) covering the Indian financial year to claim the correct tax credit under the India-Australia DTAA.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

26 September 2025 Calculate rental and interest income from 1 April 2024 to 31 March 2025.

Convert foreign income to INR at the rates prescribed by Indian tax rules.

Disclose the income and tax details in Schedule FSI (Foreign Source Income) and claim credit in Schedule TR (Tax Relief) in your Indian return.

This approach ensures compliance with Indian tax regulations and proper claiming of foreign tax credit for the period corresponding to AY 2025-26.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

26 September 2025 Good luck...

C.S.MADHURANATH

C.S.MADHURANATH (Querist)
Follow

29 September 2025 THANK YOU SIR. IN OTHERWORDS I HAVE TO TAKE FOREIGN INCOME FOR 3 MONTHS FROM 1/4/2024 TO 30/6/2024(FROM THE AUSTRALIAN FINANCIAL YEAR 1/7/2023 TO 30/6/2024) & 9 MONTHS FROM 1/7/2024 TO 31/3/2025(FROM THE AUSTRALIAN FIANCIAL YEAR 1/7/2024 TO 30/6/2025). BUT HOW TO CLAIM THE FOREIGN TAX CREDIT SINCE TAX CREDITI CERTIFICATE IS GIVEN FOR THE PERIOD JULY TO JUNE. WHETHER I SHOULD CONSIDER PROPORTIONATELY THE INCOME AND TAX CREDIT? THANKS IN ADVANCE

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

29 September 2025 Yes, for each quarter proportionately to the income...

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now