Tax query for salary earned in singapore

HI all,

I am an Indian citizen working in  Singapore from 01 Jan 2014 and am going to stay here till October 2014 earning approx. 5k SGD per month. I have a few doubts regarding the tax structure. It would be very helpful if someone could help in.

 

As I am staying for more than 182 days, so I am considered a tax resident in Singapore for this financial year. Therefore I will be taxed at the normal tax rates in Singapore. Now I want to know the financial implications on assessment year 2014-15 and 2015-16 as Indian financial year is april to March. From what I know, I would be considered an ordinary resident for the purpose of tax calculations for both asessment years as I have spent more than 365 days in the past 4 years in India.

 

1) So first of all will my full salary or income earned in Singapore be taxable in India or only the part remitted back to my Indian bank accounts? And what benefit would I get from DTAA as it exists between India and Singapore?

For AY 2014-15 your full income will be assessable in India as you will be an ordinary resident. The income to be included shall be on accrual basis. It does not matter if you remit or do not remit it. However you can claim relief under sec 90 and sec 91 for the tax paid in Singapore.
 

For AY 2015-16 you will be treated as a non resident since you will be out for more than 182 days in previous year for the purpose of employment outside India. Exception to Sec 6(1). In this case your salary in Singapore shall not be taxable in India.

2) I am not very clear on the part of income that will be considered for tax in the 2 assessment years. I assume that my salary for Jan to March 2014 will be taxed in assessment year 2014-15 whereas salary from April to October will be considered for asessment year 2015-16 (in case the whole salary is taxable which I have posted in the first query).

Yes you are right. Salary will be taxable in relevant PY on accrual basis. For assessment year 2015-16 you are not required to tax on income earned in Singapore in India.

Now as a tax resident of Singapore for assessment year 2015-16, I would be paying tax there on the whole salary as the Financial Year runs from Jan to Dec. So in essence will DTAA come into play for both assessment years as for Indian tax purposes, for AY 2014-15, I have stayed only 3 months in Singapore from Jan to March whereas for AY 2015-16, I would have stayed for more than 183 days in Singapore, from April to October. 

 DTAA for relief under Sec 90 and 91 will be relevant for AY 2014-15 only. As you are not liable for tax on income outside India for AY 2015-16, relief under Sec 90-91 is not required to be claimed. 

3) Most importanty, I have earned some income using Forex trading using my Singapore account as its allowed in Singapore (but not legal in India), and have made a profit of about 25k SGD. So I would like to know whether this income  would be taxed in Singapore? And would this income cause any problem due to it not being legal in India(but perfectly legal in Singapore) and also will it be taxed in India if I transfer the amount to my Indian account, as its not salaried income.

 I am assuming you earned this during the period Jan - March 2014. During this period you are ordinary resident in India and all incomes which accrue outside India are taxable irrespective of its legality in India. You will have to pay tax on this as income from other sources.

4) Related to the third query, but I still have my profit from Forex trading in my brokers trading account. Have not yet transferred it to my bank account in Singapore. So if I were to be taxed for this in Singapore and India, would it make any difference if I were to transfer the profits from my brokers trading account to my Singapore bank account before 31 March 2014 or after 31 March 2014?  

It does not matter. You will be taxed on accrual basis for this income.

Also will it make any difference if I were to deposit this amount before 31 March 2014 or after 31 March 2104 in my Indian account from my Singapore account (after having it transferred to my Singapore account)?

It does not matter. You will be taxed on accrual basis for this income. 

Sorry for the long post but it would be very helpful if someone could answer all my queries in a detailed manner, as I have not been able to get the answers to my questions from other sources.

 

Thanks in advance.

 

Regards

SHIRISH TULSIAN

Originally posted by : shirish




HI all,

I am an Indian citizen working in  Singapore from 01 Jan 2014 and am going to stay here till October 2014 earning approx. 5k SGD per month. I have a few doubts regarding the tax structure. It would be very helpful if someone could help in.

 

As I am staying for more than 182 days, so I am considered a tax resident in Singapore for this financial year. Therefore I will be taxed at the normal tax rates in Singapore. Now I want to know the financial implications on assessment year 2014-15 and 2015-16 as Indian financial year is april to March. From what I know, I would be considered an ordinary resident for the purpose of tax calculations for both asessment years as I have spent more than 365 days in the past 4 years in India.

 

1) So first of all will my full salary or income earned in Singapore be taxable in India or only the part remitted back to my Indian bank accounts? And what benefit would I get from DTAA as it exists between India and Singapore?

For AY 2014-15 your full income will be assessable in India as you will be an ordinary resident. The income to be included shall be on accrual basis. It does not matter if you remit or do not remit it. However you can claim relief under sec 90 and sec 91 for the tax paid in Singapore.
 

For AY 2015-16 you will be treated as a non resident since you will be out for more than 182 days in previous year for the purpose of employment outside India. Exception to Sec 6(1). In this case your salary in Singapore shall not be taxable in India.


2) I am not very clear on the part of income that will be considered for tax in the 2 assessment years. I assume that my salary for Jan to March 2014 will be taxed in assessment year 2014-15 whereas salary from April to October will be considered for asessment year 2015-16 (in case the whole salary is taxable which I have posted in the first query).

Yes you are right. Salary will be taxable in relevant PY on accrual basis. For assessment year 2015-16 you are not required to tax on income earned in Singapore in India.

Now as a tax resident of Singapore for assessment year 2015-16, I would be paying tax there on the whole salary as the Financial Year runs from Jan to Dec. So in essence will DTAA come into play for both assessment years as for Indian tax purposes, for AY 2014-15, I have stayed only 3 months in Singapore from Jan to March whereas for AY 2015-16, I would have stayed for more than 183 days in Singapore, from April to October. 

 DTAA for relief under Sec 90 and 91 will be relevant for AY 2014-15 only. As you are not liable for tax on income outside India for AY 2015-16, relief under Sec 90-91 is not required to be claimed. 

3) Most importanty, I have earned some income using Forex trading using my Singapore account as its allowed in Singapore (but not legal in India), and have made a profit of about 25k SGD. So I would like to know whether this income  would be taxed in Singapore? And would this income cause any problem due to it not being legal in India(but perfectly legal in Singapore) and also will it be taxed in India if I transfer the amount to my Indian account, as its not salaried income.

 I am assuming you earned this during the period Jan - March 2014. During this period you are ordinary resident in India and all incomes which accrue outside India are taxable irrespective of its legality in India. You will have to pay tax on this as income from other sources.

4) Related to the third query, but I still have my profit from Forex trading in my brokers trading account. Have not yet transferred it to my bank account in Singapore. So if I were to be taxed for this in Singapore and India, would it make any difference if I were to transfer the profits from my brokers trading account to my Singapore bank account before 31 March 2014 or after 31 March 2014?  

It does not matter. You will be taxed on accrual basis for this income.

Also will it make any difference if I were to deposit this amount before 31 March 2014 or after 31 March 2104 in my Indian account from my Singapore account (after having it transferred to my Singapore account)?

It does not matter. You will be taxed on accrual basis for this income. 

Sorry for the long post but it would be very helpful if someone could answer all my queries in a detailed manner, as I have not been able to get the answers to my questions from other sources.

 

Thanks in advance.

 

Regards

SHIRISH TULSIAN






 

Hi,

I will be giving your answers one by one. 

I am an Indian citizen working in  Singapore from 01 Jan 2014 and am going to stay here till October 2014 earning approx. 5k SGD per month. I have a few doubts regarding the tax structure. It would be very helpful if someone could help in.

You are a resident ordinarily resident in India and your global income will be taxable in India since your stay in India in previous year 2013-14 exceeds 182 days.

As I am staying for more than 182 days, so I am considered a tax resident in Singapore for this financial year. Therefore I will be taxed at the normal tax rates in Singapore. Now I want to know the financial implications on assessment year 2014-15 and 2015-16 as Indian financial year is april to March. From what I know, I would be considered an ordinary resident for the purpose of tax calculations for both asessment years as I have spent more than 365 days in the past 4 years in India.

You are ROR (Resident Ordinarily Resident) for AY 2014-15,

And you will be a NR (Resident but Not Ordinarily Resident) for AY 2015-16.

1) So first of all will my full salary or income earned in Singapore be taxable in India or only the part remitted back to my Indian bank accounts? And what benefit would I get from DTAA as it exists between India and Singapore?

There is a DTAA with Singapore. Which says income will not be doubly taxed. That means you will be given relief by either of the countries. 

2) I am not very clear on the part of income that will be considered for tax in the 2 assessment years. I assume that my salary for Jan to March 2014 will be taxed in assessment year 2014-15 whereas salary from April to October will be considered for asessment year 2015-16 (in case the whole salary is taxable which I have posted in the first query). Now as a tax resident of Singapore for assessment year 2015-16, I would be paying tax there on the whole salary as the Financial Year runs from Jan to Dec. So in essence will DTAA come into play for both assessment years as for Indian tax purposes, for AY 2014-15, I have stayed only 3 months in Singapore from Jan to March whereas for AY 2015-16, I would have stayed for more than 183 days in Singapore, from April to October. 

 I guess singapore follows calendar year, so for jan - april14 singapore has not deducted any tax yet (W2 form will be issued to you by the concerned authorities), hence this income will be fully taxed in India.

3) Most importanty, I have earned some income using Forex trading using my Singapore account as its allowed in Singapore (but not legal in India), and have made a profit of about 25k SGD. So I would like to know whether this income  would be taxed in Singapore? And would this income cause any problem due to it not being legal in India(but perfectly legal in Singapore) and also will it be taxed in India if I transfer the amount to my Indian account, as its not salaried income.

This I need to check...... 

4) Related to the third query, but I still have my profit from Forex trading in my brokers trading account. Have not yet transferred it to my bank account in Singapore. So if I were to be taxed for this in Singapore and India, would it make any difference if I were to transfer the profits from my brokers trading account to my Singapore bank account before 31 March 2014 or after 31 March 2014?  Also will it make any difference if I were to deposit this amount before 31 March 2014 or after 31 March 2104 in my Indian account from my Singapore account (after having it transferred to my Singapore account)?

 

Sorry for the long post but it would be very helpful if someone could answer all my queries in a detailed manner, as I have not been able to get the answers to my questions from other sources.

 

Thanks in advance.

 

Regards

SHIRISH TULSIAN

Hi,

1) I have understood that I will be taxed for my income from Jan to March during financial year 2013-14 and as I have been or will be in India for less than 182 days, so my income in Singapore will not be taxable in India for the financial year 2014-15. Now the DTAA will come into effect for the fianacial year 2013-14 only during which I was in Singapore for 3 months. But as the tax structure in SIngapore is different from India and the financial year runs from Jan to December, so the net tax paid in SIngapore is calculated on the total income earned during the financial year, and the income earned during Jan to March is actually only a part of the income which goes into calculation. It is basically a progressive tax structure so in essence the tax deducted every month is part of the total estimated tax I will have to pay in Singapore. So how would the DTAA be applied is what I want to understand. Eg. As my salary is 5000 SGD pm, so in 9 months its about 45k. Now in SIngapore, for first 20k, tax is 0, for next 10k its 2%, next 10k is taxed at 3.5% and the ramining surplus is taxed at 7%. So my total liability comes to about 900 SGD, which incidentally sits perfectly with the tax my company deducts from my salary per month, about 100 SGD. So all in all, I end up paying 900 SGD with 100 SGD deducted every month from January to September. But as DTAA is applicable only for 2013-14, so how would this be applied in my case.

For FY 13-14 you have earned foreign income (Jan-Mar) but tax will only be deducted in singapore in december 14 , you will be provided form w-2 stating the amount of tax deducted. Hence Indian authorities will consider this income in FY 13-14 but will not provide you any relief for this income as no tax has been deducted yet.

The relief for this income will be given in next FY14-15 as relief is only given when the tax is already paid.

 

2) I recently came to know that even though I get NRI status for this fin. year, i.e. 2014-15, I still cannot transfer money from my SIngapore account to any Savings account in India to get the tax benefits on my foreign income.

 This I need to check. As this is a case of Foreign Exchange Management Act.

a) Is my understanding correct? Or can I transfer any amount from my Singapore account to a normal savings account in India without any tax implications?

There are some limits to it, which will be clarified once full facts are disclosed. 

b) Also is there some specific accounts like NRE/NRO account which has to be opened to transfer money tax-free?

Yes , refer link.

https://www.femaonline.com/nricms.php?id=5 

I think this will solve all your following query regarding bank account.

c) If a specific type of account is required to transfer money tax-free to India, can I convert my normal savings account to a NRE/NRO account or do I have to open a new one? Also if can convert an account to NRE/NRO, can it be done after transferring money from SIngapore to that account or has it to be done before the transfer?

 

d) In case a normal savings account has to be opened, I can only open it after going back to India. So till that time, my money has to be kept in my Singapore account only. So after go back, is there any time frame during which I can transfer the amount to India, for eg, by end of the current financial year, or can I transfer it it parts over the next few years without any future tax implications.

 

e) As the amount I have saved and want to transfer back is not a very large sum of money(even though its an appreciable amount), so is there any easier way to transfer money to India or is this the only way mentioned above?

This is the simplest way. 

 

3) Related to my query 3 and 4 above, I actually have earned a small amount but the fact is tha money in still in my brokers account and my trader is based somewhere out of Cyprus. So as Gautam has answered above, that for fin year 2013-14 as I am a resident in India for tax purposes, so all income earned globally will be taxed on accrual basis, but I am not sure how the profits made by me in my brokers account will be calculated on accrual basis, because its just a trading account. Somedays I win trades some day I lose. Unless I transfer the profits to be Singapore account to which my trading account is linked there can be no way actually of ascertaining the period during which income was earned.

Computation will be:

Consideration (-) Cost of acquisition = Profit/loss subject to indexation.
 

 

a) Is my understanding correct? And would the amount or profits that I trasfer back to my Singapore account be considered as profit for tax purposes? As otherwise there is no other possible way to ascertain the profits I made in trading if I were to not transfer the money to my Singapore bank account.

 

b) So in essence if I were to transfer the sum of money to India now, in fin year 2014-15, so it would be counted as foreign income for this fin. year, and therefore, be tax free in accordance to proper way of transfer bac to India which I have raised in query 1 and 2 above?

 

 
For any further query PM or mail me.

AJH&CO.

anubhavjain @ ajhco.in