Compensation allowance are taxable

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2014 Dear Sir,

My client is ROR working (deputed as Project Manager) in India and paid by foreign (Belgium) Employer for Project coordination Work

To file his return I understood that I have to use ITR-2 and use column of TA_FA & FSI and get tax credit on tax paid in Belgium by his employer.

My questions

He is getting fixed Compensation allowance which is mentioned as nontaxable amount ( as compensation allowance) in his Belgium pay slip and also not mentioned in yearly Statement of Income from Belgium. Can he consider the same amount nontaxable in India?

Regards,
Pranali

Nikhil Kaushik

Nikhil Kaushik (Expert)
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24 February 2014 Pranali,

see if this discussion helps with facts of your case.

http://www.thehindubusinessline.in/iw/2000/09/17/stories/0717g201.htm

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Querist : Anonymous

Querist : Anonymous (Querist)

24 February 2014 Hi Nikhil,

Thanks

Case is different My Indian client Who is ROR, got deputed in India by his European Company.

He got Salary from Europe in European bank then he transfer online in Indian bank.

In his salary some part is compensation allowance, which European company consider non-taxable amount.

My Question

Shall I consider that compensation allowance under nontaxable income in India.

Please reply to close my case,

Thanks a lot.

Pranali

Nikhil Kaushik

Nikhil Kaushik (Expert)
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26 February 2014 ok. I believe what you mean to say is that the employment is being serviced in India only. If that is so, then by virtue of Article 15(1), such salary shall be taxed in India itself. Where this is established, you also need to compute the same as per Indian-tax law. So if such an allowance is not considered as tax-exempted in India, there could be tax liability can be there.

What you can do is, to show it as a reimbursement of expenses or something similar to take it out of the salary brackets.

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