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Income abroad

Shajahan (Associate professor) (24 Points)

22 October 2012

I am employed in India with regular salary. I am offered short term assignment in Sweden for a month and the employer in Sweden will be paying me a month's salary. They will be paying me after deducting tax at 15percent. I will have to register with the tax authority in Sweden for this. Now they will not be paying anything other than salary. i will have to meet all the expenses like 1. Return air travel, 2. Visa and insurance charges, 3. Accommodation charges in Sweden and 4. Living expenses in Sweden.

Am I required to pay taxes in India? If so how will I account for the expenses I'm making in Sweden? I'm already paying tax in Sweden as per their rule.

Please guide me in this

Shajahan

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4 Replies

Ashish M (Chartered Accountant) (2731 Points)
Replied 23 October 2012

Hi..!!!

You will certainly be paying the taxes in india on the salary you will be earning outside india.

But the benifit is that you can get the credit on the taxes paid in outside country at the average rate..!! That is, first include that income earned outside india as if it is earned in india, calculate tax on the total income. OUt of that tax, deduct the tax paid outside india at the average rate of tax on total income and pay the remaining tax in india.!!

___________________________________________________________________

- Ashish

(8802999731)

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Revanth (Job) (145 Points)
Replied 23 October 2012

HI Shajahan

We have double taxation avoidance agreement with Sweden also and so no need to pay any tax on the abroad income if you already pay taxes in Sweden.

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Saket Sinha (student) (24 Points)
Replied 23 October 2012

Hiii

You are resident in India, therofore, income earned anywhere is always taxable in your hands.

Now u r paying 15% tax in Sweden therefore the rebate under section 91 Income Tax Act 1961 will be calculated if there is no double taxation avoidance agreement with Sweden

If there is double taxation avoidance agreement is there wilth Sweden then the tax will be calculated as per the provisions of double taxation avodance agreement .

However the provisions of Double Taxation Avoidance Agreement or Income Tax Act which is more beneficial shall apply to the assessee.

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Gkumar (project manager) (72 Points)
Replied 26 October 2012

As many people as many answers. The final answer will be from AO who will play different tune depending upon what is in it for him.

India has tax treaties but no body has thought of all the details. This gentlement will spend lot of money to travel, to live in Sweden. Then he will pay 15% in tax in sweden. After that battle in India will start.

Then when he comes back he will spend time, money and bribe to get AO off his back. More likely than not, his gross salary will be treated as income. 15% swedish tax will be much less than likely 36% Indian tax.

If I were him I will not go to Sweden, unless they are paying big bucks.