Income outside india
This query is : Resolved
17 October 2015
for a resident indian whether Rental Income from property in Dubai (outside india) will be taxable ?
17 October 2015
It will be taxable in India but relief can be claimed on tax paid in Dubai.
18 October 2015
At what rate foreign income will be taxable ?
31 July 2024
Yes, rental income from property located outside India, such as in Dubai, will be taxable in India if you are a resident Indian. Here’s how it works:
### **Taxation of Foreign Income:**
1. **Taxable Income:**
- **Resident Status:** As per the Income Tax Act, 1961, if you are a resident in India, you are liable to pay tax on your global income, which includes income earned from properties located outside India.
- **Rental Income:** The rental income from your property in Dubai will be included in your total income and will be subject to Indian income tax.
2. **Tax Rate:**
- **Tax Rates:** The rental income will be taxed at the applicable income tax rates as per the Indian tax slabs. For individual taxpayers, this is based on the income tax slabs for the financial year.
3. **Foreign Tax Credit:**
- **Double Taxation Avoidance Agreement (DTAA):** India and the UAE have a Double Taxation Avoidance Agreement (DTAA). Under this agreement, you can claim a tax credit or exemption for taxes paid in Dubai on your rental income. This helps in avoiding double taxation.
- **Claiming Credit:** To claim a credit for taxes paid in Dubai, you will need to provide proof of taxes paid there and file your income tax return accordingly.
4. **Conversion of Income:**
- **Conversion Rate:** You should convert your rental income earned in Dubai into Indian Rupees (INR) using the appropriate exchange rate. Typically, the exchange rate to be used is the one prevailing on the date of receipt of income or average rate for the financial year as per the Income Tax Department's guidelines.
5. **Reporting in ITR:**
- **Schedule FA:** When filing your Income Tax Return (ITR), you will need to report the foreign income in the relevant schedule (Schedule FA for foreign assets and income) and also provide details about the taxes paid abroad to claim the foreign tax credit.
### **Example:**
- **Rental Income:** Suppose you receive rental income of AED 50K from Dubai.
- **Conversion Rate:** If the exchange rate for AED to INR is 20, the income in INR would be 50k AED * 20 = 10L INR.
- **Tax Calculation:** This income will be included in your total income and taxed according to the applicable Indian income tax slabs.
### **Summary:**
- Rental income from foreign properties, like those in Dubai, is taxable in India.
- The income will be taxed at Indian income tax rates based on your total income.
- You can claim a foreign tax credit for taxes paid in Dubai under the DTAA.
- Convert foreign income into INR using the applicable exchange rate for reporting in your ITR.
**Note:** It’s always a good idea to consult with a tax advisor or a Chartered Accountant for personalized advice and to ensure compliance with all tax regulations.
### **Taxation of Foreign Income:**
1. **Taxable Income:**
- **Resident Status:** As per the Income Tax Act, 1961, if you are a resident in India, you are liable to pay tax on your global income, which includes income earned from properties located outside India.
- **Rental Income:** The rental income from your property in Dubai will be included in your total income and will be subject to Indian income tax.
2. **Tax Rate:**
- **Tax Rates:** The rental income will be taxed at the applicable income tax rates as per the Indian tax slabs. For individual taxpayers, this is based on the income tax slabs for the financial year.
3. **Foreign Tax Credit:**
- **Double Taxation Avoidance Agreement (DTAA):** India and the UAE have a Double Taxation Avoidance Agreement (DTAA). Under this agreement, you can claim a tax credit or exemption for taxes paid in Dubai on your rental income. This helps in avoiding double taxation.
- **Claiming Credit:** To claim a credit for taxes paid in Dubai, you will need to provide proof of taxes paid there and file your income tax return accordingly.
4. **Conversion of Income:**
- **Conversion Rate:** You should convert your rental income earned in Dubai into Indian Rupees (INR) using the appropriate exchange rate. Typically, the exchange rate to be used is the one prevailing on the date of receipt of income or average rate for the financial year as per the Income Tax Department's guidelines.
5. **Reporting in ITR:**
- **Schedule FA:** When filing your Income Tax Return (ITR), you will need to report the foreign income in the relevant schedule (Schedule FA for foreign assets and income) and also provide details about the taxes paid abroad to claim the foreign tax credit.
### **Example:**
- **Rental Income:** Suppose you receive rental income of AED 50K from Dubai.
- **Conversion Rate:** If the exchange rate for AED to INR is 20, the income in INR would be 50k AED * 20 = 10L INR.
- **Tax Calculation:** This income will be included in your total income and taxed according to the applicable Indian income tax slabs.
### **Summary:**
- Rental income from foreign properties, like those in Dubai, is taxable in India.
- The income will be taxed at Indian income tax rates based on your total income.
- You can claim a foreign tax credit for taxes paid in Dubai under the DTAA.
- Convert foreign income into INR using the applicable exchange rate for reporting in your ITR.
**Note:** It’s always a good idea to consult with a tax advisor or a Chartered Accountant for personalized advice and to ensure compliance with all tax regulations.
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