Filing Taxes with Foreign Income: The deadline for filing income tax returns (ITRs) for the financial year 2023-24 approaches on July 31.
It is also important for individuals with foreign income to understand their residency status and international tax agreements.
Managing Director of Neeraj Bhagat & Co. CA Ruchika Bhagat says determining residency status is the first step in determining foreign income residency.
Non-resident Indians (NRIs) who earn money abroad are not subject to taxation. Foreign income is taxed according to slab rates for Indian residents.
The importance of Double Taxation Avoidance Agreements (DTAA) is stressed by Bhagat.
Also Read: Tax Returns: A Comprehensive Guide to ITR Forms 1 through 7
Indian taxpayers are asked to find out if their foreign income country and India have similar agreements.
Individuals can claim credits for taxes paid abroad under the DTAA, which prevents double taxation.
The founder of Taxbuddy.com, Sujit Bangar, explains the types of foreign income, including dividends, interest, and capital gains.
“Being a resident of India means all income whether earned from India or outside India will be taxable in India. There can be various sources through which residents can earn foreign income. Now a day’s lot of people are investing in stock exchange outside India so dividend, interest and capital gains on foreign investment are part of their regular income,” he told CNBC-TV18.com.
The Income Tax Act provides tax relief where the Indian government has DTAAs with the country from which the assessee earned income.
If you earn income in a country without DTAA agreement between the Indian government and that country, you can get relief unilaterally.
To claim relief under DTAA or Section 91, the taxpayer must file an Indian income tax return (ITR) and provide a tax payment or deduction certificate.
The assessee will receive tax relief based on income earned and taxes paid abroad. In addition to adhering to the CBDT guidelines, taxpayers must submit Form 67 with their ITRs.
The form facilitates the declaration and estimation of foreign income taxes.
Also Read: Next Week Tax Rebate: Who Eligible for the $1312 Stimulus Checks?
