India - singapore taxing

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2011 Hi,

A resident citizen of India, got an offer from Singapore company - the company does not have presence in India - the salary will be paid in either rupees credit to indian account or in sgp dollars credited to singapore account. The base work location is singapore, but he needs to travel to india as well as swedan for work purpose. He might end up spending lot of time (around 5-6 months) in india, and remaining time in singapore and swedan.

1. In this scenerio where and how to calculate taxes? Will he needs to pay taxes only in singapore or in india also?

2.The company is clear that they will deduct the tax and then only will credit the remaining salary. How to claim the singapore deducted tax if he is supposed to file the taxes in India?

3. The tax year of India is April to March where as singapore and swedan is Jan to Dec. How do calculate residential status for each country?

4. The rbi web site clearly defines residential status - once the person leaves India for employment, he will be NR Indian. So in this case the person is leaving India for employment and again might come back to India for business purpose. Can we assume like this? Then he needs to pay taxes as NR, then only on the income earned in India. Can he be considered as on business in India? The link for this info is -

http://www.rbi.org.in/scripts/FAQView.aspx?Id=53

5. Considering all the things, at what extent the tax liability of him to pay taxes in india as well in singapore?

Thanks in advance.

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2011 Any suggestions or replies to my previous posting?

Thanku.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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01 August 2024 In the scenario where a resident citizen of India is offered a position with a Singapore company and has to spend significant time in both India and Singapore, the tax implications can be complex. Here’s a detailed breakdown addressing your queries:

### 1. **Tax Residency and Taxation**

**Residential Status in India:**
- **For Tax Purposes:** Under Indian tax laws, an individual's tax residency is determined based on physical presence in India during the financial year (April to March). If the person is physically present in India for 182 days or more in a financial year, or 60 days in that year and 365 days in the preceding 4 years, they would be considered a resident.
- If the person is not a resident under these criteria, they would be considered a Non-Resident Indian (NRI).

**Taxation in Singapore:**
- Singapore taxes individuals based on their residency status and the source of income. If the individual is a tax resident in Singapore (typically if they are physically present in Singapore for 183 days or more in a calendar year), they will be taxed on their worldwide income in Singapore.

**Income in India:**
- If the individual spends significant time in India (5-6 months), they may be considered a resident in India for tax purposes if the residence tests are met. In such a case, they would be liable to pay tax in India on income earned in India and also on income earned abroad if they qualify as a resident.

### 2. **Tax Deducted in Singapore and Claiming in India**

- **Tax Deducted at Source:** If the company in Singapore deducts tax on the salary paid, this will be Singaporean tax.
- **Claiming Credit in India:** When filing the Indian tax return, the individual can claim a credit for taxes paid in Singapore under Section 91 of the Income Tax Act, which allows for relief under a Double Tax Avoidance Agreement (DTAA). India and Singapore have a DTAA that provides relief from double taxation. The individual will need to provide proof of tax paid in Singapore and include it in their Indian tax return to claim this credit.

### 3. **Tax Year and Residential Status Calculation**

- **India:** The financial year runs from April to March.
- **Singapore and Sweden:** The calendar year runs from January to December.
- **Residential Status Calculation:** For each country, determine residency based on their respective criteria. In India, calculate the number of days spent in India during the financial year. In Singapore, determine residency based on the calendar year and the 183-day rule.

### 4. **RBI Guidelines and Business Presence**

- **RBI Definition:** According to the RBI, a person who leaves India for employment and returns may be considered a Non-Resident if they meet the conditions specified.
- **Business Purpose:** If the person is traveling to India for business purposes but not residing there, they might be considered a Non-Resident in India for tax purposes. They will need to pay tax in India on income earned within India, but not on their global income.

### 5. **Tax Liability and Double Taxation**

- **Tax in India:** The individual will be liable to pay taxes in India on income earned in India. If they are a resident, they will also need to declare their global income, but they can claim relief for taxes paid in Singapore.
- **Tax in Singapore:** The individual will be liable to pay taxes in Singapore on their worldwide income if they are a tax resident there.

**Summary of Tax Liabilities:**

- **Income Earned in India:** Taxable in India, potentially eligible for tax credit for taxes paid abroad.
- **Income Earned Abroad (Singapore and Sweden):** Taxable in Singapore and Sweden based on their residency and tax laws. The individual can claim relief from double taxation under the DTAA provisions in India.

### Practical Steps:

1. **Determine Residential Status:** Evaluate your residency status in each country based on their specific criteria.
2. **File Tax Returns:** File tax returns in both India and Singapore, declaring all relevant income and claiming tax credits as applicable.
3. **Consult Professionals:** Given the complexity of cross-border taxation, consult with tax professionals in India and Singapore to ensure compliance and optimize tax liabilities.

Navigating international tax issues can be complex, so professional advice tailored to your specific situation is highly recommended.

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