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Foreign tax free money transferred to india

Mallaya (Project Manager) (30 Points)

16 October 2012

Dear Experts, Worked in Indian company till April 2012. From May 2012 I was appointed in a gulf company in Bahrain . I went in a business visa and completed my joining procedure in a month and came back India to apply for bahrain work permit . Since there was a delay in my visa processing, I was forced to stay in India and working from home all these days. I recently got the Bahrain work permit and planned to fly next week. My tax free salary was credited to my India bank account through wire transfer by my employer. Should I pay the income tax for my foreign salary in India ? Atleast another 1 year I would be working in Bahrain. Please clarify me. Malaya

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3 Replies

(Guest)

Yeah, the above said income is liable for income tax as the amount is initially transferred to an indian bank account as per section 9 of Income Tax Act, 1961. How ever you can avail the benefit of Double Taxation Agreement between Bahrain and India and reduce the tax liability.

Mallaya (Project Manager) (30 Points)
Replied 16 October 2012

Hi Sai, Thanks for your response. Since this is a tax free money transferred by my employer to my Indian bank account, how it could be taxable. More over I am going to work more than 6 months in this financial year and 2 years over all. It is as good as I am earning a tax free money from a foreign country and transferring to my account in India . Please correct me if I am wrong.

(Guest)

As per Income Tax Act , The income directly deposited into Indian bank account is deemed to be income received in India. The alternative which you can follow is you can open a bank account in Bahrain soon and ask the employer to deposit it there. So that it will not be taxed. Do this before the income received in India exceeds Taxable value i.e. Rs. 2,00,000/- . Further transfer to India is not taxable anyway. The creteria is it should not be directly deposited in indian bank account .

All the best,