LIVING EXPENSES OF AN EMPLOYEE STAYING ABROAD!!!!!!!!!!!!!!!!!!!!!!!!

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Sindhu (Querist)

19 October 2007 WAT ABOUT THE LIVING EXPENSES OF AN EMPLOYEE STAYING ABROAD???? IS IT EXEMPT OR TAXABLE??? IF EXEMPT UNDER WHICH SECTION????

R.V.RAO

R.V.RAO (Expert)

19 October 2007 The incidence of taxation is attracted if any income arises or accrues or is deemed to arise or accrue in India. Also income received or deemed to be received in India is subject to tax in India. Hence in your case regardless of your residential status if such income has any of the above characteristics it would attract tax in India. (SOURCE REDIFF TAX ADVICE)
all forms of allowances are taxable as salary, in this case too i believe that as the per diem allowance is in the nature of allowance, the differential on account of foreign currency fluctuation would also merit treatment on par with the travelling allowance and hence be taxable as salary.
This is the reason why some Indian based software companies, who send personnel abroad on three-months to two-year assignments clearly advise not to bring back any forex to India. Of the daily allowance employees get they are not supposed to save any money and are told to spend all money abroad, even if one gets the satus of NRI by virtue of staying abroad for more than 181 days.
R.V.RAO

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