How to file income earned outside India, by an Indian resident

How to file income earned outside India, by an Indian resident

 This particular issue raises a lot of questions amongst the Indian Residents who are having income from outside India, be it Salary income from their foreign projects or be it rent from a property owned outside India.  The questions like “Do I have to declare my foreign income?” or “Do I have to pay taxes on the foreign income, even if I have paid taxes to the foreign tax authorities?”

Well, let’s see if we can answer almost all of your questions, shall we?

To start with, For Resident Indians both the incomes which accrue or arise in India & Outside India are Taxable in India.

Let us determine who Resident Indian is:

A person would be a Re sident of India for income-tax purposes if

  • He/She is in India for 182 days or more during the financial year

OR

  • If he/she is in India for at least 365 days during the 4 years preceding that Financial year AND at least 60 days in that Financial year.

Declaring your Foreign Income:

Yes. Whatever you have earned from your foreign sources, you will have to declare the same while filing your tax returns. Some of you might be wondering “what if i don’t declare my foreign income. Would that make any difference?” We say yes, because it is not advisable to conceal your foreign income as there are heavy penalties levied by Income Tax department against concealment of Income.

So whatever your foreign income is, you will have to convert the same in Indian rupee and add the same to your total income. Taxation is as per the slab rates prescribed by the Income tax department.

Taxability & Relief

As discussed earlier, the foreign income of resident Indian will be taxable in India. However, if you have paid any taxes in the foreign country where you earned your foreign income, you can claim the relief under Double Taxation Avoidance Agreement (DTAA). The relief is based on the relevant articles of the DTAA between India and foreign countries.


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