Foreign Remittance

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lingam (Querist)
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28 July 2009 Dear Sirs,

One of my ex-employee is presently working in USA since last 7-8 months and he has transferred some funds to India. whether the amount transferred is taxable or not.

Thanks & Regards
Mr.Lingam

M Prabhakar Menon

M Prabhakar Menon (Expert)
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29 July 2009 The applicability of Sec 56(2)(vi) is to be examined for which more data is required

lingam

lingam (Querist)
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29 July 2009 Thanks sir, he has transferred the amount to in his own saving account not given any gift to anybody, my question is while computing his total income, his salary earned in India will only be consider for taxation or funds transferred to india will also be consider.

As per Form 16A -Gross T.I- Rs.192000/-
Foriegn Remmittance Around Rs.350000/-

Thanks & Regards
Mr.Lingam

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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25 July 2024 In the context of income tax in India, the taxation of foreign remittances depends on various factors. Here’s a breakdown of how it typically works:

### Taxation of Foreign Remittance in India:

1. **Tax Residency Status:**
- If your ex-employee is a resident of India for tax purposes, their global income is taxable in India. Tax residency is determined based on the number of days physically present in India over a financial year (April 1 to March 31).

2. **Income Tax Computation:**
- **Income Taxable in India:** For a resident taxpayer, all income earned worldwide is taxable in India. This includes income earned abroad (like salary, rental income, business income, etc.) and income earned within India.
- **Exemption for Foreign Income:** If your ex-employee qualifies as a Non-Resident Indian (NRI) or qualifies under the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and the USA, certain exemptions or deductions may apply to the income earned abroad. However, this does not typically extend to foreign remittances made into India.

3. **Taxation of Foreign Remittances:**
- **Source of Funds:** Funds transferred from abroad to India, even if they are not earned income but personal savings, are generally not taxable in India.
- **Gift Tax:** Gifts received by individuals in India from non-relatives exceeding a certain threshold may be taxable under the Indian Income Tax Act. However, for funds transferred to one's own bank account, this usually doesn't apply unless there is a specific gifting scenario.

4. **Form 16A and Taxable Income:**
- Form 16A is typically issued for TDS (Tax Deducted at Source) on income sources like interest, dividends, etc. It provides information on taxes deducted from such income. For salary income, Form 16 (not Form 16A) is issued by employers.
- **Taxable Income Consideration:** The gross total income (T.I.) mentioned in Form 16A or any other income sources should be considered while computing total taxable income in India.

### Conclusion:

- **Salary Income:** The salary earned in India (as per Form 16) will be considered for taxation in India.
- **Foreign Remittance:** Funds transferred from abroad to India by your ex-employee are generally not taxable unless they are part of income earned abroad, which should be reported as global income.

To ensure accurate tax compliance, it’s advisable for your ex-employee to consult with a tax professional who can assess their specific situation considering all relevant details, including their tax residency status, the nature of funds transferred, and any applicable tax treaties.

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