NRI Taxation
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 July 2010
I have worked in my company’s UK branch(intra company transfer work permit) for 4 months during FY 2009-10. I have paid tax in UK(TDS) and also filed ITR in UK.
is my income also taxable in India. What about DTAA? Would I have to pay tax in both countries?
is my income also taxable in India. What about DTAA? Would I have to pay tax in both countries?
26 July 2010
ya ur income wil be taxable in india also since u were resident. for resident global income is taxable in india
however due to provision of DTAA ur income would be exempt and u need not pay the tax for uk income in india
however due to provision of DTAA ur income would be exempt and u need not pay the tax for uk income in india
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 July 2010
Hi Srinath, Would appreciate if you can quote the necessary section regarding DTAA and UK income exemption for Indian employee.
04 August 2024
In the context of an NRI working in the UK and paying taxes there, here's how the tax treatment would work for your income in India, considering the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and the UK:
### **1. Taxability of Income in India**
- **Income from Foreign Employment:**
- If you worked in the UK for 4 months during FY 2009-10, the income earned during this period is generally not taxable in India if you qualify as a non-resident according to Indian tax laws.
- **Resident Status:** You will be considered a resident of India for tax purposes if:
- You are in India for 182 days or more during the financial year, or
- You are in India for 60 days or more during the financial year and 365 days or more during the 4 preceding financial years.
### **2. Double Taxation Avoidance Agreement (DTAA)**
- **DTAA Between India and the UK:**
- The DTAA between India and the UK provides relief from double taxation by allowing the taxpayer to claim a credit or exemption for taxes paid in the foreign country (UK) against taxes payable in India.
- **Article 15:** The relevant provision for employment income is typically Article 15 of the DTAA, which addresses the taxation of income derived from employment. Under this article, income from employment is generally taxable only in the country where the employment is exercised. However, if the employee is a resident of the other country (India), the income may also be taxed in the country of residence (India), but the taxpayer can claim relief under the DTAA.
### **3. Tax Relief under DTAA**
- **Credit Method or Exemption Method:**
- **Credit Method:** If your income is taxable in India, you can claim a credit for taxes paid in the UK. This credit is available under Section 91 of the Income Tax Act, 1961.
- **Exemption Method:** If the DTAA specifies that the income is taxable only in the UK, then you may not need to report this income in India.
### **4. Relevant Sections of the Income Tax Act and DTAA**
- **Section 91 of the Income Tax Act, 1961:** Provides relief from double taxation by allowing a credit for taxes paid to foreign countries.
- **Article 15 of the DTAA Between India and the UK:** Governs the taxation of employment income. You should refer to the specific text of the DTAA to determine how your income is treated.
### **Steps to Follow**
1. **Determine Residency Status:** Check if you qualify as a resident in India for the relevant financial year.
2. **Consult DTAA Provisions:** Refer to the DTAA provisions to understand the taxation rights of India and the UK regarding your employment income.
3. **Claim Relief:** If you are liable to pay tax in India on your UK income, claim relief under Section 91 or as per the provisions of the DTAA.
### **Example Calculation**
If you have already paid taxes in the UK, you can claim this amount as a credit against any tax liability in India. You would need to provide proof of tax payment in the UK and complete the necessary documentation for claiming the credit.
### **Consult a Professional**
Tax matters involving international income and DTAA can be complex. It’s advisable to consult a tax professional or advisor who specializes in international taxation to ensure compliance and accurate filing.
If you need more specific advice or help with the documentation, feel free to ask!
### **1. Taxability of Income in India**
- **Income from Foreign Employment:**
- If you worked in the UK for 4 months during FY 2009-10, the income earned during this period is generally not taxable in India if you qualify as a non-resident according to Indian tax laws.
- **Resident Status:** You will be considered a resident of India for tax purposes if:
- You are in India for 182 days or more during the financial year, or
- You are in India for 60 days or more during the financial year and 365 days or more during the 4 preceding financial years.
### **2. Double Taxation Avoidance Agreement (DTAA)**
- **DTAA Between India and the UK:**
- The DTAA between India and the UK provides relief from double taxation by allowing the taxpayer to claim a credit or exemption for taxes paid in the foreign country (UK) against taxes payable in India.
- **Article 15:** The relevant provision for employment income is typically Article 15 of the DTAA, which addresses the taxation of income derived from employment. Under this article, income from employment is generally taxable only in the country where the employment is exercised. However, if the employee is a resident of the other country (India), the income may also be taxed in the country of residence (India), but the taxpayer can claim relief under the DTAA.
### **3. Tax Relief under DTAA**
- **Credit Method or Exemption Method:**
- **Credit Method:** If your income is taxable in India, you can claim a credit for taxes paid in the UK. This credit is available under Section 91 of the Income Tax Act, 1961.
- **Exemption Method:** If the DTAA specifies that the income is taxable only in the UK, then you may not need to report this income in India.
### **4. Relevant Sections of the Income Tax Act and DTAA**
- **Section 91 of the Income Tax Act, 1961:** Provides relief from double taxation by allowing a credit for taxes paid to foreign countries.
- **Article 15 of the DTAA Between India and the UK:** Governs the taxation of employment income. You should refer to the specific text of the DTAA to determine how your income is treated.
### **Steps to Follow**
1. **Determine Residency Status:** Check if you qualify as a resident in India for the relevant financial year.
2. **Consult DTAA Provisions:** Refer to the DTAA provisions to understand the taxation rights of India and the UK regarding your employment income.
3. **Claim Relief:** If you are liable to pay tax in India on your UK income, claim relief under Section 91 or as per the provisions of the DTAA.
### **Example Calculation**
If you have already paid taxes in the UK, you can claim this amount as a credit against any tax liability in India. You would need to provide proof of tax payment in the UK and complete the necessary documentation for claiming the credit.
### **Consult a Professional**
Tax matters involving international income and DTAA can be complex. It’s advisable to consult a tax professional or advisor who specializes in international taxation to ensure compliance and accurate filing.
If you need more specific advice or help with the documentation, feel free to ask!
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