Income Tax return of an individual resident

Hi Sandeep! Here’s a detailed response to your queries on income tax return filing and foreign income for a resident Indian who moved to Singapore during FY 2020-21:

1. Conversion rate for Singapore income to INR

• As per Income Tax rules, foreign income must be converted into Indian Rupees at the telegraphic transfer buying rate (TT Buying rate) on the date(s) of receipt of income.

• If income is received periodically (like monthly salary), convert each payment at the respective date’s TT buying rate.

• If exact date-wise rates are difficult to track, you may use the average rate for the relevant period from the Reserve Bank of India’s (RBI) exchange rate data, with proper documentation.

2. Relief under DTAA (Double Tax Avoidance Agreement)

• India and Singapore have a DTAA which avoids double taxation on the same income.

• Since the assessee is resident of India in FY 2020-21 (stayed >182 days in India), global income is taxable in India.

• However, relief is available under DTAA:

  • Income earned and taxed in Singapore will be taxed in India but relief for tax paid in Singapore can be claimed under Section 90(2) or Section 91 (whichever applicable).

  • Either exemption method or credit method is applied based on DTAA terms; mostly credit method applies for salary income.

3. Foreign tax credit for tax paid in Singapore (Nov’20-Dec’20)

• Yes, the tax paid in Singapore for Nov’20-Dec’20 can be claimed as foreign tax credit (FTC) in India while filing the ITR.

• This credit is available against the Indian tax payable on the same income.

• To claim FTC, you need to fill Form 67 before filing the ITR and attach proof of foreign tax paid (tax payment challans, tax assessment order, etc.).

• Ensure the tax credit claimed does not exceed the Indian tax liability on the foreign income.

4. Tax credit for Jan’21-Mar’21 salary paid in 2022 (Singapore tax year is calendar year Jan-Dec)

• Singapore calculates tax on calendar year basis, so the tax for Jan’21-Mar’21 income will be paid in the assessment year 2022.

• As per Indian tax laws, FTC can only be claimed for foreign taxes actually paid in the relevant previous year or before filing of the ITR.

• For FY 2020-21 (AY 2021-22), tax paid in 2022 on Jan-Mar’21 income will not be available for FTC.

• However, the credit can be claimed in the next year’s return (FY 2021-22 or AY 2022-23) when the tax is actually paid.

• You must ensure no double claim of income or credit across assessment years.

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