Tax on foreign compensation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2010 Hello experts,
I need advice on tax filing n forein income.
I had got an offer from a european company, I hhad signed the offer letter. but the company later asked me not to join and inturn, gave me some compensation.

I heard that the income earned abroad is not taxed, if you are working there.
But I never joined the company. Am I liable to pay tax on this to the indian government?... or to the european government?

If yes, what is the tax rate on which I should pay this tax?

Anticipating a promt reply. I have searched thouroughly on the net, but found no solution.

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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26 July 2010 The compensation received from the European Co. is taxable in India. It is not taxable in Europe.

The amount paid to you is in the nature of compensation for not joining the employment. As there is no employee-employer relationship, it cannot be taxed as salary. Hence it will be taxed under the residuary head 'Income from other sources'.

There is no special rate to tax such income. It will be added to your other income earned in India & taxed at normal rates.

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