Taxability in India depends on source of income

If the place of location of employment is India, then salary for such employment is considered as India source


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I was working in Dubai from 2009 to 2015. In April 2015, I came back to India. The company is now allowing me to work from India and it will pay me in my Indian bank account from its bank account in Dubai. A fixed salary of $1,000 every month and the commission that I earn by doing marketing for them, will be transferred to my Hindu Undivided Family’s (HUF) bank account in India every month. What will be my tax liability and how should I invest to pay minimum tax? What documents should I collect from my employer as proof of income?

—Dhaval Shah

Taxability in India depends on source of income and residential status. Any income, the source of which is located in India, is taxable in India (irrespective of residential status). India sourced income includes income received or arising in India. If the place of location of employment is India, then salary for such employment is considered as India source. Salary and commission received from your Dubai employer while working in India will be taxable in India as India sourced income, irrespective of the bank account in which it is received. You may collect your salary and commission payslips from the Dubai employer as a proof of income. Ideally, your employer is required to withhold tax before payment of salary and deposit this tax with the Indian revenue department.

As your employer may not deduct any tax, you will be liable to pay advance tax due in four instalments as follows, 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March.

If you fail to pay advance tax on or before prescribed dates, then you will be liable to pay interest. You can also pay self-assessment tax before filing the return along with interest on or before 31 July 2016.

I want to remit money to my grandparents every month from the US. How can I ensure that they have minimum tax liability on this?

—Venkat R.

Under the Indian income tax laws, there is no gift tax in India. However, gifts comprising of cash exceeding Rs.50,000 are considered as income in the hands of the recipient, except if the amount is received from relatives or on special occasions such as marriage, under a Will, and so on.

Relatives for this purpose include lineal ascendants and descendants. Hence, the gift received by your grandparents from you will not be considered as taxable in their hands.

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