How non-residents can avoid income tax in India: Here is how to claim benefits
In April 2016, I was sent on deputation by my company to its subsidiary in Japan. In 2016-17, I did not visit India. Thus, my residential status for 2016-17 is non-resident in India and resident in Japan. I had received my salary from Japanese company in India. I have paid tax on salary income in Japan. Will this salary income be again taxed in India? – Vikas Kumar
A non-resident is taxed only on income that is received in India, or that accrues or arises, or is deemed to accrue or arise, in India. Since salary income is received in India it will be chargeable to tax in India. However, you being a non-resident can claim benefit under India-Japan DTAA subject to availability of Tax Residency Certificate and self-declaration in Form 10F. As per Article 15(1) of the DTAA between India and Japan, the State of residence has the exclusive right to tax the salary income derived by a resident of that Contracting State, unless the employment is exercised in the other Contracting State. Since the employment was exercised by you in Japan while you were a non-resident in India, the salary income would be taxable only in Japan subject to prescribed documentation.
I filed my return of income of salary in ITR1. Thereafter I was told that since I held some foreign assets, I should have filed ITR-2. Should I file a new return in ITR-2? —Arun Ramalingam
The I-T Act provides opportunity to the taxpayer to rectify his apparent mistakes or omission by revising his original return within the prescribed timelines. Since you failed to report the details of foreign assets in ITR-1, you can rectify it by filing a revised return in ITR-2 where you can provide the details of foreign assets.
l I sold a plot and invested the money in a residential house. However, the new house was purchased in my wife’s name. Can tax authority deny capital gains exemption on that ground? — U P Rao
There is nothing in Section 54F to show that the house should be purchased in the name of the assessee only. It merely says that the assessee should have purchased/ constructed a residential house. In many cases, the courts have adopted a liberal interpretation to extend the benefit to cases where investments have been made in the name of wife. Relying on the judicial precedence, tax authority shall not deny the capital gain exemption on the ground that the document is in your wife’s name.