Double taxation

Others 884 views 6 replies

kumaresh gopalsamy

senior software engineer

25 Points Posted on 15 June 2012

Dear Sir,
I Came to United Kingdom for 4 months assignment in client location.I have query regarding double taxation.For 4 months I will get only UK salary and no India salary.

Assume I getting 2200 GBP as gross and net is 2000 GBP i.e.20 % Tax deduction in UK.

India gross salary for 8 months is 400000. How much tax I have to pay in India in Financial year ?

Thank you

Regards
Kumaresh

Replies (6)

shankar

CA CS Final

243 Points Posted on 15 June 2012

	Computation of Tax liability for the A.Y 2012-13
Sr.		Amount	Amount
1	Indian Income	400000
2	Foreign Income	189200
3	Total Income		589200

4	Tax on Net Income	49840
5	Add: Education cess	1495
6	Tax Liability in India		51335.2

7	Rate of Tax in India	9%
8	rate of Tax in foreign country	20%

9	Doubly taxed income	189200
10	rabate u/s 91 of incom etax act 1961		16484
11	Tax payable in India		34851

kumaresh gopalsamy

senior software engineer

25 Points Posted on 16 June 2012

Hi Shankar

Much appreciate your Reply.

How did you calculate the below ones ?

1) Tax on Net Income 49840

2) rabate u/s 91 of incom etax act 1961 16484

It seems I am paying tax of Rs. 34851 in India and 200 GBP in UK.

Thank you

Regards

Kumaresh

shankar

CA CS Final

243 Points Posted on 16 June 2012

Dear Kumaresh,

But you have written that you paid 20 % Tax deduction in UK. That is why I have taken 20% foreign Tax Rate.

But now this time I correct/amended my answer as per ………………… 200 GBP paid as tax deducted in UK

Important Note - It is assumed that There is not DTAA between both the country. if there is DTAA between both the country then answer will be different.

Computation of Tax liability for the A.Y 2012-13

Sr.	Particulars	Amount	Amount	Reason/Comments
	Indian Income	400000		As per your question
	Foreign Income	189200		I assumed 1GBP = 86 INR
	Total Income		589200
	Tax on Net Income	49,840		As per Slab rate for the AY 2012-13. Mentioned in Note 1
	Add: Education cess	1495		At the rate of 3%
	Tax Liability in India		51,335
	Rate of Tax in India	8.71%		(51335*100)/589200
	rate of Tax in foreign country	9.09%		(200*100)/2200

	Doubly taxed income	189200		Note 2
	Rebate u/s 91 of income tax act 1961		16,484	189200*8.71%
	Tax payable in India		34,851	(51,335 – 16484)

Note 1

Sr.	Slab	Rate	Liability	Calculation
	Up to Rs 1,80,000 No tax	exempt	Nil
	1,80,001 to 5,00,000	10%	32000	((500000-180000)*10%)
	5,00,001 to 8,00,000	20%	17840	(589200-500000)*20%
	Above 8,00,000	30%	Nil
Total			49,840

Note 2

You are paying double taxed on 189200, so as per income tax act you are eligible to get rebate under section 91 to avoid double tax.

Thanks with Best regards

Shankar Singh

fathima

student

130 Points Posted on 02 July 2012

what will be the answer If there is DTAA?

shankar

CA CS Final

243 Points Posted on 02 July 2012

if the DTAA is there then Answer will be -

In such case the tax credit allowed to the extent of tax paid in foreign country.

Computation of Tax liability for the A.Y 2012-13

Sr.	Particulars	Amount	Amount	Reason/Comments
	Indian Income	4,00,000		As per your question
	Foreign Income	1,89,200		I assumed 1GBP = 86 INR
	Total Income		5,89,200
	Tax on Net Income	49,840		As per Slab rate for the AY 2012-13. Mentioned in Note 1
	Add: Education cess	1,495		At the rate of 3%

	Tax Liability in India		51,335
	Less – Tax Credit u/s 90		17,200	= 200GBP*86=17,200
	Tax payable in India		34,135	(51,335 – 17,200)