Tax relief

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parikshit asher (Querist)
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20 October 2012 Hello,
Suppose if a senior citizen goes outside india on 28/10/2012... for employment pupose, then what does the taxation rule says....
According to Residential Status 1st Rule only applies to the resident going outside India for employment.
What my Question is - Does he have to pay tax in India as well as in the country in which he will be staying.....or is there any relief for the said question as he completes the more than 182 days in India....

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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20 October 2012 THE ASSESSEE WILL BE TREATED AS RESIDENT HENCE ALL WORLD INCOME WILL BE TAXED IN INDIA BUT MUCH WILL DEPEND UPON THE COUNTRY TO WHICH HE HAS GONE AND DTAA BETWEEN INDIA AND THAT COUNTRY.
GENERAL RULES OF TAXATION OF INCOME FM EMPLOYMENT UNDER DTAA ARE AS UNDER
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if :

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year;

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State.

3. Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in international traffic by an enterprise of a Contracting State may be taxed in that State.

CA MANOJ GUPTA
JODHPUR
09828510543

parikshit asher

parikshit asher (Querist)
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25 October 2012 OK....Thank you sir for the information.....
1. The Country is Indonesia, which i think is at 100% relief
2. The Co. is registered at Indonesia. It is not a subsidiary of an Indian Based Co.

So what would be the Tax Liability Now...

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Thanks for the follow-up! Here’s a clearer picture based on your info:

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### Situation Recap:

* Senior citizen leaves India on **28/10/2012** for employment in **Indonesia**.
* He is likely a **resident** of India for FY 2012-13 (since >182 days spent in India).
* Income is earned from employment in Indonesia for an Indonesian company (not an Indian subsidiary).

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### Taxation & Relief Overview:

**1. Residential Status & Taxation in India:**

* Since he is a **resident** (spent more than 182 days in India), **worldwide income is taxable in India**.
* This means income earned in Indonesia will also be taxable in India.

**2. Double Taxation Avoidance Agreement (DTAA) between India & Indonesia:**

* India and Indonesia have a DTAA which provides relief to avoid double taxation.
* As per typical DTAA rules (and your example):

* Income from employment exercised in Indonesia may be taxed there.
* India will provide credit for the tax paid in Indonesia on this income to avoid double taxation.
* Conditions such as **presence less than 183 days**, employer being resident of Indonesia, and remuneration not borne by Indian PE are relevant for specific exemptions.

**3. Tax Credit / Relief:**

* The senior citizen can claim **foreign tax credit (FTC)** in India for taxes paid in Indonesia on the same income.
* This means:

* He pays tax in Indonesia as per their law.
* He files income tax return in India declaring global income.
* Claims credit for tax paid in Indonesia under the DTAA provisions.
* Pay balance tax if Indian tax is higher, or no tax if foreign tax is equal or higher.

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### Summary for Your Case:

| Point | Position |
| -------------------------------- | --------------------------------------------- |
| Residential status (FY 2012-13) | Resident (Indian tax resident) |
| Income taxable in India | Yes, worldwide income |
| Taxation in Indonesia | Yes, on employment income there |
| Relief available | Foreign Tax Credit under India-Indonesia DTAA |
| Employer registered in Indonesia | Yes, so tax likely payable there |

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### What to do next:

* Keep proof of taxes paid in Indonesia.
* Declare worldwide income in Indian ITR.
* Claim Foreign Tax Credit using Form 67 & relevant schedules.
* Check exact DTAA clauses or consult a tax expert for detailed filing.

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If you want, I can help you find the exact DTAA article or how to claim foreign tax credit in Indian returns — just ask!

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