Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: cpt :: VAT RATES :: VAT Audit :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: form 3cd :: empanelment :: articles on VAT and GST in India :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4%
« News Headlines »
 I-T Department may go into overdrive this quarter
 Ways to reduce the TDS deduction from your salary
 4 Tips for choosing who prepares your 2017 Tax Returns
 Processing of income-tax returns under section 143(1) of the Income-tax Act which were filed in Forms ITR-1 to 6 & applicability of section 143(1)(a)(vi)
 Price Waterhouse gets 2-year ban in Satyam case
 How to save income tax under section 80C
 These four expenditures can help you save tax under section 80C
 How to avoid excess deduction of TDS from salary income
 Income-tax deduction from salaries during the financial year 2017-18 under section 192 of the Income-tax Act, 1961
 Comparison of 10 tax-saving investments under Section 80C
 10 Income Tax-Saving Options Beyond Section 80C Limit

No double taxation on salary covered by treaty
January, 29th 2007

The basis for charging tax on income primarily depends upon the receipt or accrual of income and the residential status of the taxpayer. Generally, a person who is resident is taxed on his world income in India. But a person who is a non-resident or who is a not ordinarily resident does not pay tax on foreign income in India. 
The salary income, however, stands in a peculiar situation under the Indian income tax law. The income under the head salaries will be taxed in India if it is earned in India. Salary for services rendered in India shall be regarded as income earned in India. 
Because of this provision, the salary income of a foreigner would be taxable in India if such salary is earned in India, irrespective of the fact whether it is received in India or outside. The implication of this provision is that a foreigner who receives his salary income wholly outside India, or partly in his home country and partly in India, is liable to pay tax in India on his entire salary income, including that portion of his salary which is received by him outside India. 
Practical problems, however, do arise when a person is a resident of one country but he exercises his employment in another country. The problem is further multiplied by the different types of tests which are prescribed to determine the residential status of a person in different countries. 
For example, in India, the test for determining the tax status is the number of days a person lives in India in a particular fiscal year. In certain countries the determination of tax status is based on domicile, residence, citizenship, place of management or other criterion of a similar nature. 
The above situation often makes an expatriate employee resident of both India and the other country. In such a case, it is to be decided as to where his salary income will be liable for tax. 
The solution is to be found in the related tax treaty. The tax treaties generally provide that income from employment is taxed in the State where employment is actually exercised. But, the State where the employment is exercised may not tax the income if the individual is present in the other Contracting State for a period not exceeding 183 days in the 12-month period. 
In the above context, it will be useful to refer to a recent ruling by the Authority for Advance Rulings in the case of British Gas India Pvt. Ltd. (2006) 287 ITR 462. In this case, two Indian employees were deputed to work in UK. During the period of deputation, they continued on the payroll of the Indian company and regularly received salary in India. However, they received certain allowances in the UK. 
The following questions were referred to the Authority: 
Whether the salary income received in India from Indian company for rendering services outside India is taxable in India? 
Whether the Indian company is required to withhold taxes on salary paid in India for rendering services outside India? 
The Authority ruled that salary paid by the Indian company shall not be taxable in India, if the same has been offered for tax in the UK, in pursuance to the tax treaty with the UK. Accordingly, it was also held that the Indian company shall not deduct any tax at source from the salary paid, provided it is satisfied that taxes have been paid in the UK.

H P Agarwal

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Work Flow Workflow Software Software Automation Workflow automation Software Design Workflow Design Business Work Flow Workflow automation tools

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions