taxation in India for us citizen

kreati · Post by **kreati** » Mon May 09, 2011 4:18 am

Hi,
I have one simple question. i have gone th' threads and I understood that I have to pay tax to GOI since I am going to stay in India working for usa for 3 full years.
My quesitons
: suppose I earn 90000 dollars per annum, do I have to pay tax at 30% of 90000 $ or will there be any standard deductions like we have in USA.

I am going to India on sep 1,2011 and going to stay there for 3 years. do I have to pay taxes for 2011 .
will be grateful if you could find some time to answer my questions.
thanks.
Rao

kkassociate · Post by **kkassociate** » Mon May 09, 2011 4:10 pm

Hi Kreati,

You are coming to India in September, 2011, hence your stay in India will be Resident not Ordinary Resident, (RNOR), for the year ending 31st March, 2012. In this situation you will be required to pay income tax for the financial year 1st April, 2011 to 31st March, 2012 on your earnings (your earnings in this case will be only the proportion of $ 90K ). You will be eligible for the relief against India income tax liability if you have paid any federal taxes to the IRS. Also since you will be resident of India you will be paying only the differential taxes to India. You need to also comply with the advance tax norms.

We provide both US and India tax filings from Pune, India. You can email us in detail to [email][email protected][/email] or visit us at www.kkassociate.com.

Regards,
KKA

Vid_Bangalore · Post by **Vid_Bangalore** » Fri May 13, 2011 11:27 am

KKAssociates,

Thanks for helping out so many forum members. Really appreciate it.

I would like to know your input on the following scenario:

What happens when:
An Indian citizen (by name "ABC" for our reference), GC holder, works for a US company, gets salary through US payroll, works from US for 3 months and works from home in India (for the same US company) for 9 months. Now, given that since it is a US payroll, federal & state taxes will already be cut from the salary every month in US,

A> Since he has already paid his federal taxes in US, can he get an excemption in India? If yes, to what extent? Will he have to pay zero taxes in India??

B> Or since he is an Indian citizen, will he have to pay 30% tax in India and claim foreign tax credit in US (or is it foreign earned income exclusion? hmm..)?

All in all, how much percentage of his income will he have to pay in taxes, put together, including both the countries (rough estimate is enough here)

Please explain in detail.

Thanks in advance,
V_B

kkassociate · Post by **kkassociate** » Fri May 13, 2011 3:38 pm

Hi Vid,

Taxation in India has nothing to do with your citizenship. It is based on your residency. Since your number of days stay in India will exceed 183 days, you will be considered as Resident for India tax purpose and will be taxed on the US payroll income here in India, because you are providing the services by utilising the resources staying here in India. Section 9 of the Income tax Act, 1961 specifically covers this situation.

About the taxes, your employer will be deducting federal and state taxes for the US pay which will be claimed against your US tax liabilities. You will be part year resident for the state tax purpose and will be liable to pay state taxes only for the period of your stay in that particular state. When you file India tax returns you can take relief under section 90 for the for the federal taxes against your India income tax liability. Article 2 of the DTAA is very clear and it allows only Federal taxes paid as a relief and not the social security, medicare and state taxes paid by you against your India income tax liability.

In short you will be paying only the differential taxes in India as it is your resident country. The relief and Foreign tax credit are pretty complex and need to worked on carefully.

We provide both USA and India tax filing services from Pune. You can mail us your complete details on [email protected] or visit us at www.kkassociate.com

Regards,
KKA

Vid_Bangalore · Post by **Vid_Bangalore** » Sat May 14, 2011 10:24 am

KKAssociates,
Thanks for the clarification. I have just another question : If a person has been living in US and just moved to India (in addition to details given in post # 3), and if he is in RNOR status, will he be excempt from paying taxes on his US income ie., US payroll in this case??

The person concerned here is eligible for 2 years RNOR status..

TIA,

zen · Post by **zen** » Tue May 24, 2011 1:10 am

Is there a good time to R2I in order to avoid the dual taxation for the first year in India? Considering that you need to be in India for 183 days & since the Indian tax year is till 31st March, should a NRI/USC R2i in September?

RRK · Post by **RRK** » Tue May 24, 2011 11:49 am

zen;390336Is there a good time to R2I in order to avoid the dual taxation for the first year in India? Considering that you need to be in India for 183 days & since the Indian tax year is till 31st March, should a NRI/USC R2i in September?

If you return after Oct 1, you can file as NRI for that financial year.

raj779 · Post by **raj779** » Tue Jun 07, 2011 4:08 am

If I R2I in July or August 2011 then for the year 2011 do I have to pay taxes in USA for the period from Jan 2011 to August 2011 ? If yes then when I file Indian taxes for the period April 2011 to March 2012 can I deduct the taxes paid in USA for this period or I will be again taxed in India for the income in USA for the period March 2011 to July/August 2011 since I will have lived in India for more than 183 days ? This is a dual taxation scenario, if this happens than it is a big hit monetarily.

Appreciate your inputs.

Thanks!

dbs · Post by **dbs** » Tue Jun 07, 2011 2:49 pm

raj779;392879R2I in August 2011 then for the year 2011 ...... will be again taxed in India for the income in USA for the period March 2011 to July/August 2011

If you were an NRI in August 2011, GOI will not tax you on the income from April to August as you will be RNOR in that period.

Wait for knowledgable people to answer other questions.

okonomi · Post by **okonomi** » Wed Jun 08, 2011 7:23 am

is there an Indian Tax website like www.irs.gov for the usa ?