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Dtaa

Abhishek Pandey (Student CA Final ) (246 Points)

24 November 2016

I am having difficulty in understanding how DTAA works. Appreciate, someone thro light. I am INDIAN resident and INDIAN tax payer in current financial year. I have SALARY income in USA .I was living there since 4 years and in current financial year after working for 3 months I came back to India. My question is, I have paid tax on my 3 month salary for current year in USA , and rest month TDS is being deducted from salary in India. I want to know that I have to club my income to 3 month USA income to Indian income for payment of TAX or I can simply the tax on the rest of 9 month income only generated in India? Thanks

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Hitesh Khanna (Accounting & Finance Taxation Company Law Audit ) (839 Points)
Replied 24 November 2016

Under DTAA your Global Income i.e. USA income plus Income earned in India both have to be taken into Account to compute the TAX liability.
From the Tax liability so calculated Tax paid in Foreign country is allowed as a credit and only the NEt Tax amount Amount needs to be paid.
pls note that Tax calculation in respect of DTAA transaction is slightly different, so consult a CA for the same