Dear Mr. Pravin,
I have reviewed your query and the reply is as under:
Facts:
1. You were working for a software company in India.
2. You were deputed to Germany on assignment during the month of Februaury 2010.
3. Subsequently you were employed by the Germany Company.
4. I understand that you have received your salary in germany and the taxes on the same are paid by you in germany.
5. You intend to file your return of Income in India for the financial year 2009-10.
Query:
1. What shall be your tax liability in India for the financial year 2009-10?
2. Which article of DTAA with Germany i.e.Article 15 or 23 applies to you?
3. How to disclose your germany salary in Indian Income-tax return?
4. Which ITR form is required to be filed by you?
Reply:
Reply 1:
Tax liability in India depends on the Residential Status of an Individual as mentioned below:
I)Residential Status - Resident and Ordinarily Resident (ROR):
World Income of an assessee is taxable in India if he has ROR status.
II) Residential Status - Resident but not Ordinarily Resident (RNOR):
FOllowing income shall be taxable to an assessee if he has RNOR status-
a)Income accrued or arose in India.
b)Income received in India.
c)Income from any business connection in India.
III) Residential Status - Non Resident Indian (NRI):
Following Income shall be taxable to an assessee if he has NRI status-
a)Income accrued or arose in India.
b)Income received in India.
As mentioned by you that you have received the salary for the month of February and March 2010 in germany, we understand that you were employed in India from April 2009 to January 2010. Hence your residential status shall be that of ROR and hence the world income shall be taxable to you in India. Hence, the salary income received by you from Germany Company shall be taxable in India.
Reply 2 & 3:
As per the DTAA between India and Germany:
ARTICLE 15 - Dependent personal services - 1.. .
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if :
(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned,
(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3.. .
As per the above mentioned article, it can interprtated that the salary received by you in Germany shall be taxable only in the Germany and not in India, this is because, as per the facts provided by you we understand that the salary is borne by the permanent establishment in Germany.
Hence, you shall not be required to disclose such income in Indian Income tax returns and hence the same shall be exempt from the tax.
The opinion in Reply 1 and Reply 2&3 are contradictory, however, by virtue of provsions of the Indian Income-tax Act, 1961, an assessee has the option to opt for the benficial option.
Hence it is beneficial in your case to take the shelter under the Article 15 of the DTAA and so there is no need to disclose the salary income from germany company in india as the same shall not be taxable in India
Reply 4:
I understand that your major source of income in India shall comprise of the following:
1. Income for Salary.
2. Income from House Property.
3. Capital Gains.
4. Income from Other Sources (i.e. Interest Income on your NRO Bank Accounts)
Hence, you shall be required to file ITR 2 Form.
I can assist you to file the same for you in India. My charges shall be Rs.2500/- for each financial year.
For your information, please find attached herewith my contact details where you can approach me for any further clarification or assisstance:
Name : Hardik A Mehta
Email Id:
[email protected]
Contact No.: +91 9819 480 180