How to claim relief under section 90/91

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 July 2012 Last year I stayed in US for 3 months on L1 visa and earned some income (lets say 6L INR)I have W2 form showing this incoe in $.

This income is also shown in my form 16 under head Salaries and taxes(TDS) are paid accordingly.

Now I want to claim this back in my tax filing.So I have several questions regarding this.

1.Form 16 don't mention about this amount as Foreign income but just salary.So what documents I have to submit to IT and How(I have W2 form)

2.Filling ITR1 is enough or I need to fill any more form?

3.How to calculate the relief amount.(By removing L1 income and calculating remaining tax minus TDS)

Please guide me in filing the tax ASAP as time is running off.

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2012 Any Idea on 90/91 query

Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2012 Any update on this guys..

Querist : Anonymous

Querist : Anonymous (Querist)

05 July 2012 No response yet

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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28 July 2024 To claim relief under Sections 90 and 91 of the Income Tax Act, you need to follow specific steps and provide the required documentation. Here’s a detailed guide to help you through the process:

### **1. Understanding Sections 90 and 91:**

- **Section 90**: Provides relief to residents of India who have paid tax in a foreign country with which India has a Double Taxation Avoidance Agreement (DTAA). This relief can be in the form of a tax credit or exemption, depending on the DTAA provisions.

- **Section 91**: Provides relief for taxes paid in a foreign country where there is no DTAA with India. It allows for a credit of taxes paid to the foreign country against the Indian tax liability.

### **2. Steps to Claim Relief:**

#### **1. Documentation Required:**

- **W2 Form**: Shows the income earned and taxes paid in the US.
- **Form 16**: Shows the income and TDS deducted in India.
- **Bank Statements**: To show the remittance and conversion of foreign income into INR.
- **Tax Returns of the US**: If available, to show the tax paid in the US.

#### **2. Filing the ITR:**

- **ITR-1**: If you meet the conditions for filing ITR-1 (e.g., income is only from salary, interest, etc.), you can file using this form. However, if you have income from other sources or foreign income needs to be detailed, you might need to file ITR-2.

- **ITR-1**: For residents having income from salaries, one house property, other sources (excluding winnings from lottery and race horses), and having total income up to ₹50 lakhs.
- **ITR-2**: For residents having income from salary, house property, capital gains, and other sources, including foreign income and foreign assets.

#### **3. Calculation of Relief:**

1. **Convert Foreign Income to INR:**
Convert the income reported in the W2 form from USD to INR using the exchange rate on the date of receipt or the average rate for the year.

2. **Include Foreign Income in Your Tax Return:**
- Add the foreign income to your total income in your ITR form.
- Ensure that you also include the taxes paid abroad in the tax details.

3. **Claim Relief:**
- **For DTAA Countries (Section 90)**: Calculate the tax payable in India on the total income including the foreign income. Then, claim the credit for the foreign taxes paid as per the provisions of the DTAA.
- **For Non-DTAA Countries (Section 91)**: Claim relief by showing the taxes paid abroad as a credit against the Indian tax payable, subject to the limits specified in Section 91.

- **Relief Calculation**:
- Compute the total tax payable on the global income including the foreign income.
- Compute the tax payable on the income earned in India alone.
- Subtract the tax credit for the foreign taxes paid from the total tax payable in India.

4. **Fill Relevant Sections in ITR:**
- **ITR-1**: Include details in the appropriate sections.
- **ITR-2**: Use the Schedule FA (Foreign Assets) and Schedule FSI (Foreign Income) to report foreign income and taxes.

### **4. Filing Process:**

1. **File the Tax Return:**
- Ensure all income, including foreign income, is accurately reported in the tax return.
- Claim the appropriate relief under Sections 90/91.

2. **Submit Documentation:**
- While filing online, you generally upload supporting documents like W2 form and any other relevant documents if asked.
- Keep all documents and proofs for future reference in case of any queries or audits.

3. **Follow Up:**
- After filing, monitor your tax status and refund status.
- If necessary, respond to any queries from the Income Tax Department.

### **Example Calculation:**

1. **Foreign Income:** $6,00,000 (Convert to INR)
2. **Tax Paid in Foreign Country:** (as per W2 form)
3. **Total Income (Including Foreign Income):** INR (calculated based on exchange rates)
4. **Total Tax Payable in India:** Calculate based on total income.
5. **Tax Credit Claim:** Based on taxes paid abroad or under DTAA provisions.

### **Summary:**

- **Documents Needed:** W2 form, Form 16, bank statements, tax returns.
- **ITR Form:** Likely ITR-2 if there’s foreign income.
- **Relief Calculation:** Convert foreign income, compute Indian tax on total income, claim credit for foreign taxes paid, and report in ITR.

If you need precise calculations and guidance, consult a tax professional who can offer tailored advice and ensure compliance with all relevant tax regulations.

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