Income tax on oustation allowance

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2012 I am working in a Indian IT Company. I would like to get your advice regarding my income tax India.

Now I am deputed in Germany for a 1 year period (This is the first time I am abroad). I'm getting salary from Indian IT Company in my Indian bank account and Outstation allowance in German bank account.
My salary in India is 7 Lakhs per year. [Income tax is deducting from my Indian salary]
Outstation Allowance in Germany is 10 Lakhs per year paid by Indian company. [Not paying the tax in Germany and India for this allowance]. I am saving half of the allowance and transfers to Indian bank account.

Should I pay the income tax to India for the full outstation allowance / Can I show any deductions as expense in Germany?

By reading the NRI criteria of Income tax laws, come to know that if I come to India for a 60 days in this year (with 365 days in India in previous 4 years) myself will be considered as Resident Indian.
Is there any advantage in Tax by coming to India for a 60 days this year / Is it better to continue for this full financial year here in Germany?

Amol S Joglekar

Amol S Joglekar (Expert)
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11 September 2012 This outstation allowance is a very TRICKY portion. Who is paying this? your indian company or foreign counter part? Income earned outside India by NON RESIDENT as per income tax is not taxable in India. The money saved out of that when remitted to India is also not taxable. But the issue is who is paying the sum and where is it adjusted?

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Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2012 Thank you for your valuable comment.

This outstation allowance is paid by my Indian IT Company.

Is it possible to consider this as increased cost of living (section 10(14) of the Indian Income Tax Act) ?

Amol S Joglekar

Amol S Joglekar (Expert)
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12 September 2012 No, that is not the intent of 10(14).

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