Do Resident Individual earning foreign income have to disclose this income & pay Tax in India?

Shreya returned to India in 2010 after living in London for more than 5 years. The French Company she worked for has retained her as a consultant and sends her fees in pounds. Her salary is credited to a bank account there and Shreya pays tax on it in UK.

 Does Shreya have to pay tax on this income or include it in her income tax return in India?

Shreya is a resident in India. Taxability of income in India depends upon residential status. A Resident has to pay tax on their Global Income. The resident must disclose all the income earned by them from all sources and all countries in their income tax return and pay tax on it in India. (a NRI pays tax only on income earned or accrued in India).

Therefore, all of Shreya’s income, including the fee that she earns in foreign currency will be taxable in India.

Her income in pounds shall be converted to Indian rupees for the purpose of income tax calculation and added to her total income, which will be taxed at slab rates prescribed by the tax department.

If Shreya has already paid tax on the foreign income in UK – she can claim the benefit under Double Tax Avoidance Agreement. Based on the relevant provisions of the DTAA between the two countries, Shreya will be saved from getting taxed twice.

If you are a Resident and have earned any income from abroad remember to disclose it in your Income Tax Return – you can still e-file your Return on ClearTax for financial year 2012-13 and 2013-14.

Are you paying taxes in two countries? Our CAs can help you get double taxation relief. Write to us at support@cleartax.in

 

Find out how much tax you need to pay.

 

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