International taxation

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 July 2011 My client was deputed for the purpose of employment to USA for less than 183 days. He has received salary income over their and paid taxes.

I would like to know:-
a)After computation of his total income (including US income)and taking credit under DTAA of the taxes paid there,I'm arriving at at refund. Can we claim refund in India for excess taxes paid in US?
b) Does he have to file Income tax return in US to claim refund?
c) What is the exchange rate for the purpose of conversion ?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

10 July 2011 a)After computation of his total income (including US income)and taking credit under DTAA of the taxes paid there,I'm arriving at at refund. Can we claim refund in India for excess taxes paid in US?

Reply- In respect of US Income , max. tax credit can be taken on the basis of average rate of Indian Tax. As such in any case tax credit can not result into refund of foreign tax.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

10 July 2011 b) Does he have to file Income tax return in US to claim refund?

Reply- As we have certain provisions in our Act where return is not required to be filed by NRs WHERE EVER certain special rate of TDS are applicable, similar provisions can be found in US taxation law also.

I think, he is not required to file his return in US.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

10 July 2011 c) What is the exchange rate for the purpose of conversion ?

*
Reply- Telegraphic Transfer Buying Rate prevailing on the last day of the preceding month is taken for conversion purpose in case of salary.
Suppose the Salary is due on 5 th June then TT Buying Rate of 31st May will be taken.

Querist : Anonymous

Querist : Anonymous (Querist)

11 July 2011 Thank you Sir. I still have certain doubts:
My client has earned 5000$ p.m for 3 months,and the tax is deduced at the rate of 6 %. He has spent 2000p.m on rent,food,conveyance etc. Shouldn't he get deduction for it? Or only the income which is remitted to India is taxable and not the gross?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

12 July 2011 He will not be allowed any deduction in respect of rent, food, conveyance etc.

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