Is it attainable to simplify the US-India guidelines on Double Tax Avoidance Agreement (DTAA)? I must merge 4 months of my US wage with the India wage. What rule of DTAA is relevant in such a case? How a lot tax paid within the US shall be exempt in India? I’ve shifted to India and shall be a resident right here. I’m a Non-Resident Alien within the US. Do I must pay taxes on the India earnings within the US too?
—Name withheld on request
Assuming you qualify as “Resident and Ordinarily Resident” of India and “Non-Resident” of the US, you’d qualify as “resident” of India beneath the DTAA between India and the US.
As per Section 5 of the Income-tax Act, 1961, you’re taxable in India on the next incomes:
(a) Income that accrues or arises or deemed to accrue or come up in India
(b) Income obtained or deemed to be obtained in India
(c) Income that accrues or arises exterior India
An particular person qualifying as ROR can be required to report belongings held exterior India as overseas earnings within the Indian tax return.
Accordingly, your wage earnings and different private earnings within the US will even be taxable in India as per the above provisions. However, as per Article 25(2) of the DTAA, you might declare overseas tax credit score in India in opposition to India income-tax payable in your US-sourced earnings for taxes paid within the US to keep away from double taxation.
To declare overseas tax credit score in India, additionally, you will must file Form 67 electronically earlier than the due date to file ITR. Form 67 must be supported by a certificates/assertion specifying the character of earnings and the quantity of tax deducted or paid within the US.
You might want to search skilled recommendation from a US tax professional for the tax implications within the US.
Sonu Iyer is tax accomplice and folks advisory providers chief, at EY India.
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