Income tax - foreign national

This May Help You.........

Section 2(1) of the Act defines “advance tax” to mean the advance tax payable in accordance with the provisions of Chapter XVII-C of the Act. Section 209(1)(d) which deals with the situation under which advance tax is payable by the taxpayer states that the income-tax calculated shall be reduced by the amount of income-tax which would be deductible or collectible at source. This clause categorically uses the expression “deductable or collectable at source”.

· If the payer making payments to the non-resident had defaulted in deducting the tax at source from such payments, the non-resident is required to pay taxes. However, in such a case, the non-resident is liable to pay tax and not advance tax. Therefore, it would not be permissible to charge any interest under Section 234B of the Act for failure to pay advance tax.

· Section 195 of the Act puts an obligation on the payer, i.e. any person responsible for paying to a non-resident, to deduct income tax at source at the rates in force from such payments. The liability to deduct or collect tax at source is that of the payer. It was not duty of the payee and therefore the question of payment of any interest would not arise since it cannot be said that the taxpayer was in default for the purposes of Section 234B of the Act.

· Once it is found that the liability to deduct tax at source was that of the payer and the payer has defaulted in deducting the tax at source, the tax department can take action against the payer under the provisions of Section 201 of the Act and recover the amount which such a person was required to deduct at source from the payments made to a non-resident along with penalties, etc.

· The Supreme Court in the decision in the case of M.H. Anjum Ghaswala which is relied upon by the tax department held that if there is a default in making the payment of advance tax, then interest becomes payable under Section 234B of the Act. However, in the case under consideration, the provisions of Section 234B of the Act would not be attracted at all.

Thank you Suresh,

My understanding is:

-          I have not to pay advance tax in India.

-          I have to file Tax return for the year 2010-2011 in April 2011

-          Consider relief for the tax paid to CRA -Canada Revenue agency- by Canadian employer. They issue T4.

-          If tax is more pay balance, if less just file it or no need to file tax return

-          Canadian employer is at defaulter? He is deducting tax in Canada.

If you explain in simple words it would be more helpful. As I am Engineer my understanding of Rule may not be correct,

Respected Ajay Shah sir,

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thanks for the advice

Ajay

Mr.Ajay

since your stay exceeded 183days, you are a resident and your salary is taxable as you have rendered services in India. You may calculate tax and claim DTAA for tax deducted in canada-sudarshan

Sudarshan,

Thank you very much for your help. This makes matter simpler

Regards,

Ajay