According to the ARTICLE 25(2)(a) of DTAA between USA and INDIA :
" Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the United States, whether directly or by deduction.
Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States."
india-usa dtaa link : https://www.allindiantaxes.com/usa%20.php
Therefore income first to be included in TOTAL INOCME and from the tax caluculated as per indian tax rate ,deduction shall be given of tax paid in usa in rupees.
deduction (in amount) from total tax should not be more than = tax (in amount) attributable to the income which is taxed in the United States
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 = 2,50,000 and
USA income = $ 43,086 TAX PAID @ 30%,
exchange rate on date of USA income = 1$ = 66.80 RS
SOLUTION:
Indian Income = 2,50,000
USA income ( $ 43,086 * 66.80 ) = 28,78,145
GROSS TOTAL INCOME = 31,28,145
Less : dedcution 80C = 1,50,000
TOTAL INCOME = 29,78,145
TAX as per indian rate = 7,39,997
Less :Deuction of tax paid in USA (NOTE) = 6,80,857
TAX PAYABLE IN INDIA = 59,140
( interest 234A/B/C not calculated)
NOTE : checking the condition of deduction limit :
(a) tax paid in usa in INR ($ 12,925.80 * 66.80 ) = 8,63,443
(b) TAX ATTRIBUTABLE to usa income = 6,80,857
(7,39,997 * 28,78,145 / 31,28,145)
WHICHEVER IS LOWER
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
Situation like yours : /forum/foreign-taxation-345103.asp
NOW , except above there is no tax implications on transfering money to indian account .
CAclubindia
