Foreign taxation

According to the ARTICLE 24 (2) of DTAA between UK and INDIA : 

" Subject to the provisions of the law of India regarding the allowance as a credit against Indian tax of tax paid in a territory outside India (which shall not affect the general principle hereof), the amount of the United Kingdom tax paid, under the laws of the United Kingdom and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of income from sources within the United Kingdom which has been subjected to tax both in India and the United Kingdom shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. "

india-uk dtaa link : https://www.allindiantaxes.com/uk%20.php

Therefore income first to be included in TOTAL INOCME and from the tax caluculated as per indian tax rate ,credit shall be given of tax paid in usa in rupees.

% of credit  to total tax should not be more than =   % of uk income to total income

exchange rate prevaling on the date of receipt of income shall be taken.

this website will help you find exchange rate on particular date  :  https://www.xe.com/currencytables/#

 now lets take your case and assuming:

indian income =12,50,000 and

exchange rate on date of GBP income = 1GBP = 97.82 RS 

SOLUTION:

Indian Income                                =                      12,50,000

GBP income ( 43,086 * 97.82 )        =                      42,14,673

GROSS TOTAL INCOME               =                      54,64,673

Less : dedcution 80C                      =                       1,50,000

TOTAL INCOME                            =                      53,14,670

TAX as per indian rate                    =                      14,61,984

Less : tax paid in UK ( 7076.53 * 97.82 ) =                 6,92,226

TAX PAYABLE IN INDIA               =                         7,69,758

(  interest 234A/B/C not calculated)

checking the condition of credit limit :

(a) % of uk income to total income = 77.13%

(b) % of credit taken to total tax = 47.35%

since (b) is less than (a) therefore full credit allowable .

RETURN FILING : You have to file ITR-2 . WHY? because in ITR-1 there is no provision of  DTAA relief .  and to get that relief you do'nt have to go to ITR 4 , ITR-2 is sufficient  . 

After filling ,  your important schedules :

1.Part B TTI

2.Schedule FSI - tax payment outside india

3.Schedule TR - claim

WILL SOMTHING LOOK LIKE THE IMAGES in  ATTACHED  FILE  .

1. Then take indian income = NIL

2. In present case since you have already received refund , you are not required to show refund GBP 10,000 , you only have to show NET tax paid i.e GBP 7076.53 .

now question arise ;

WHEN DOES THE REQUIREMENT OF SHOWING REFUND IN UK IN SCHEDULE-TR ARISE?

this situation arise when you have received refund of any earlier A.Y in which you have claimed full amount of tax pain in uk in indian return . 

since out of total tax claimed you have received refund , that deduction earler allowed should not have been allowed to you therefore income tax dept want to know the details of refund taken in UK so that it can be taxed appropriately in india.

in which case you are required to give 3 details :

1. REFUND  of earlier year in respect of which relief in india has been claimed - has been received or not ?

2.if yes the amount of refund in INR.

3. and the assessment year in respect of which refund belong.