Dividend up to ₹10 lakh from shares exempt
To claim Foreign Tax Credit, you must submit a statement of foreign income and tax deducted on income, in Form 67
Say person A is in Germany from December to March. He earned money in Germany in the form of salary. Now he has ₹16 lakh as his total income in Germany after conversion, according to RBI rates, out of which ₹4 lakh is already paid in taxes in Germany. He also has income of ₹2.5 lakh in India. Which ITR will he need to file—ITR 1 or ITR 2? Will Form 67 also need to be submitted along with it? How will the tax be computed? Can the person get complete relief of ₹4 lakh as per Section 91A or will he get relief only under Section 90?
Which ITR form you should file depends upon the sources of income you have earned during the financial year. Assuming you do not have any professional or business income, you must file ITR-2 since you have foreign income. Section 90 talks about claiming of Foreign Tax Credit (FTC) in a case where India has entered into a Double Taxation Avoidance Agreement (DTAA) with another country and such DTAA provides for claiming of such FTC. Section 91 deals with claiming of FTC in scenarios where India has not entered into a DTAA with the country where the income arises for a taxpayer.
India has entered into a DTAA with Germany, so you can claim relief as per Section 90.
To claim FTC, you must submit a statement of foreign income and tax deducted on such income, in Form 67. If you are filing your return online, you would have to submit this form online. Besides this, a statement has to be obtained from the tax authority of Germany certifying the nature of income received in Germany and the tax deducted thereon. Proof of payment of taxes abroad must also be furnished. Note that all these details must be furnished before the due date of filing return of income.
I have earned dividend on a few stocks. I am a resident of Canada. Is the dividend income taxable?
Dividend up to ₹10 lakh from stocks listed in India is exempt in the hands of shareholders. However, a 10% tax shall be payable on dividend received from a domestic company if total dividends received during the financial year exceed ₹10 lakh. This is laid down under Section 115BBDA of the Income Tax Act. Since you are a resident of Canada, you must check the tax implications of earning this income locally.
To read more queries, go to livemint.com/askmintmoney
Archit Gupta is founder and chief executive officer, ClearTax. Queries and views at firstname.lastname@example.org
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