Opinion Of Eminent Legal Luminaries On Controversial Issues

Can Benefit Of Indo-USA Be Claimed By A Person Who Was Seconded To Parent Company?

QUERY: Ajay was seconded to US for 11 months by his company to work in its parent company while being on Indian company payroll. As per US do-mestic tax laws, Ajay was advised to offer his US sourced income which is nothing but his 11 months salary received in India while being in US. However since the salary was being paid in India, the TDS u/s. 192 was accordingly deducted while remitting the salary to Ajay in his Indian bank account. Now Ajay (since qualifying as a Non-resident) wants to know instead of claiming the exclusion as per Article 16(1) as prescribed in Indo-US DTAA in his return of income, can the same be claimed in his Form 16 itself?
ANSWER: As Ajay was seconded to USA for 11 months by his company to work in its parent company, while being on India company’s payroll, he does not become a non-resident as per section 6(1)(c) of the Income-tax Act, 1961.

So he remains “resident” in the previous year, and therefore salary earned in USA will be taxable in his hand.

Since he is a resident of India, he can claim benefit of India-USA Treaty and eligible to claim benefit of Article 25 of the said treaty for relief from double taxation.

Posted in Income-tax

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