Photo: istock
Photo: istock

DTAA allows you to claim credit for tax paid in the UK from the tax to be paid in India

For an individual who is a resident in India, income earned anywhere in the world is taxable in India

I am currently employed with a UK-based company and I work from home, in India. I get paid in UK pounds every week. My question is, can I get double tax scheme benefits as I am already staying in India? Also, I have received bonus for FY 2016-17 this year. So, in which FY will the same be taxable? The bonus corresponds to last year.

—Name withheld

Since you live in India and do not live or work outside India, you are likely to be a resident of India for income tax purposes.

For an individual who is a resident in India, income earned anywhere in the world is taxable in India. Therefore, payment received by you from the UK will be taxable in India. If the UK employer is deducting taxes before making a payment, you can take the benefit of the Double Taxation Avoidance Agreement (DTAA) between India and the UK. This will ensure that your income is not taxed twice; first in the country of origin of income and then again in the country of residence of the taxpayer.

DTAA allows you to claim credit for tax paid in the UK from the tax to be paid in India.

Bonus and other forms of salary payments are taxed on due or paid basis, whichever is earlier.

If you did not include your bonus in your income tax return in FY 2016-17, you can do so now, in the year in which it has been received. You can include it in your income for FY 2017-18 at the time of filing tax returns and pay advance tax on it to avoid penal interest.

I am an NRI. My family is staying with me in Doha. My wife has some fixed deposits and dividends from shares and minor income from interest. The total income is less than Rs2 lakh. Is she eligible for standard exemption in tax? Kindly advise.

—A.K. Sharma

The basic exemption limit of Rs2.5 lakh is allowed to all irrespective of whether they are resident or non-resident in India. This limit goes up to Rs3 lakh where the individual is more than 60 years old but less than 80 years old. For those who are more than 80 years old, the exemption limit is Rs5 lakh. Your wife's income is exempt up to Rs2.5 lakh, assuming she is less than 60 years old.

Archit Gupta is founder and chief executive officer of ClearTax.

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