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Global Resident Taxation (US-India)

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Nikhil Kothari

2 Points Posted on 04 November 2021

Hello,

I had a question regarding the computation of the income tax I would owe in India. I left USA in April and continued to work from home from India from April 2021 and resigned in November 2021 and settled in India. Since I am in India since April, I am a tax resident of India and tax resident of USA as well.

My question is that the financial year is different in USA and India. How do I calculate the tax that I would owe in India?

Example:

1st jan 2021 - 31st December 2021

Income = $70,000
Deduction in US = $12000
Net taxable salary = $58,000
Federal Tax = $9000
State Tax = $3000

So how do I calculate the tax credit in India.

1. Do I prorate the deduction and tax paid I received for entire year for time from 1 April - 31st December and take tax credit for it in India and leave the portion of prorated tax and prorated deduction before April?

2. Can I get tax credit for state tax paid? I have heard multiple things about it and not sure.

Thanks for your help :)

Replies (2)

Quick Summary

This discussion addresses the complexities of global resident taxation for individuals who have moved from the US to India. The user, a tax resident of both countries, seeks clarification on how to calculate their Indian income tax liability, given the differing financial years and the need to account for US taxes paid. The advice provided suggests paying Indian tax only on salary earned from April to December 2021, as the period before April falls under NRI status. It also clarifies that federal taxes paid in the US during the relevant period can be claimed as a deduction in India.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212548 Points Posted on 04 November 2021

You need to pay tax (in India) only for the salary received from April to Dec. 2021. for AY 2022-23.

For Jan to March 2021, (AY 2021-22) you were NRI, no tax liability over the sum.

Any federal tax paid during second to forth quarter of 2021 will be allowed for deduction while assessment of the tax over the salary income, in India.