agrawal.rm@…….com Hello,I was in US in year 2005 for about 4 months. I was employed by an Indian company in US where I was paid salary in US$ on which I was paying income tax to US govt. Some 10% of the salary which was already tax paid to US govt. was being paid in India in INR by deducting relevant Income Tax to Indian govt. So it is a case of double taxation.I already filed the return in 2006 for year 2005 to US govt. on the earned salary in US by paying the applicable income tax over there.
Secondly, I have claimed the refund on the income tax for 10% salary which I was again taxed in India. I believe as I did not stay for 182 days in US so I cannot be NRI. But I was having NRI status in 2004 and in current year 2006.I am worried whether I will get the refund on the income tax claimed to Indian govt. or I will be ask to pay the income tax on the complete US salary on which I have already filed the return to US govt. and case is closed. Kindly clarify ASAP.
Unfortunately, for the FY 2005-06 , in which you were in USA for four months. For that year , you were resident in India for I T Act purpose. It means , your global income is taxable in India for FY 2005-06 and not the 10 % of income which was shown by you.
You will have to pay the tax on total income(salary) , but you will also be allowed “relief ” u/s 90 of the I T Act. There is DTAA signed with USA and Article 25(2) of the I T Act , says that the Resident Indian gets deduction of of tax paid to USA .
If you have filed the return in USA , you have abide by the taxation laws of USA , unfortunately, same is not true about your compliance with Indian law.If you are not asked by the department , you are lucky !
I would suggest you read following posting
“Article 25 – Relief from double taxation – “2. (a) 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
3. For the purposes of allowing relief from double taxation pursuant to this article, income shall be deemed to arise as follows :
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(a) income derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention [other than solely by reason of citizenship in accordance with paragraph 3 of article 1 (General Scope)] shall be deemed to arise in that other State ;
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(b) income derived by a resident of a Contracting State which may not be taxed in the other Contracting State in accordance with the Convention shall be deemed to arise in the first-mentioned State. “
Also Read following article
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