Hi,
I was on H1b in the US since 2003 on H1B visa and filing my taxes in the US. As of second week of Oct 2010, I moved back to India and hence would be in India for less than 182 days for india tax year. Also meet the conditions for RONR (if relevant) for future years.
I continued to work for my US employer who is witholding my US taxes as if I am in the US, and may do so till Mar 2011. Would like to get clarity on what my tax liabilities would be in US and India for upcoming years.
1) What would be my tax filing status in US for year 2010? Would I be liable to pay income for the whole year as I was a resident?
2) What will be my tax filing status in India in 2011? Would I have to declare income from working for the US employer and pay taxes on that in India too?
3) What will be my US tax filing status for US in 2011 - say I continue to work till Mar 2011 for my employer? Would I be filing as a non-resident? As the taxes are already withheld from my salary would I get a refund for those taxes when I file?
4) Also what are the implications of DTAA in my case.
Any help in understanding the issues would be greatly appreciated and I believe helpful to many.
Thanks,
ABC
H1B R2I tax liability in India working for US employer
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kkassociate
- Posts: 173
- Joined: Mon Oct 05, 2009 4:45 pm
H1B R2I tax liability in India working for US employer
Hi ABC,
1) Since your presence in India for year Ending 31st March, 2011 will be less than 182 days in India, you will be filing the India tax return as a non resident and reporting only the Indian source income.
For USA tax purpose you will be considered as a resident for Federal and part year resident for state and will be filing the taxes accordingly to the IRS and state department of revenue.
2) You will be Resident but Not Ordinarily Resident (RNOR), Since you will be performing the services by staying here and using the resources from India, per amended Section 9 of the Income tax Act, 1961, your income will be deemed to accrue and arise and India and would be liable to tax in India. You need to pay advance tax on the regular basis.
3) Your tax filing status in USA for 2011 will be Non Resident and based on AGI you will be getting the refund.
4) Because of the DTAA between India and USA, you will be eligible for relief for the taxes which will be withheld on your W2 income in the US. Contact us for more clarifications on [email][email protected][/email]
Regards,
KKA
1) Since your presence in India for year Ending 31st March, 2011 will be less than 182 days in India, you will be filing the India tax return as a non resident and reporting only the Indian source income.
For USA tax purpose you will be considered as a resident for Federal and part year resident for state and will be filing the taxes accordingly to the IRS and state department of revenue.
2) You will be Resident but Not Ordinarily Resident (RNOR), Since you will be performing the services by staying here and using the resources from India, per amended Section 9 of the Income tax Act, 1961, your income will be deemed to accrue and arise and India and would be liable to tax in India. You need to pay advance tax on the regular basis.
3) Your tax filing status in USA for 2011 will be Non Resident and based on AGI you will be getting the refund.
4) Because of the DTAA between India and USA, you will be eligible for relief for the taxes which will be withheld on your W2 income in the US. Contact us for more clarifications on [email][email protected][/email]
Regards,
KKA
H1B R2I tax liability in India working for US employer
Thanks KKA,
I am still not clear, as there seems to be a conflict with the information in another thread (or I am missing something?).
Please refer to the thread below and let me know your thoughts
http://www.r2iclubforums.com/forums/showthread.php/17502-QN-for-Rajesh-Dhruva-Paying-Indian-Taxes-on-US-Income
USA employee working in India #12
[INDENT]Dear Sid,
1. An Indian citizen returning to India ; continuing to work for US company and also paid by US company in US$ in USA or India will have implications of Income Tax Act, 1961 [IT Act] and Double Tax Avoidance Agreement (DTAA) between India and USA.
.02 The said Treaty provides for taxation of salary income payable by US company to a person discharging duties in India to be taxed in USA if the stay does not exceed 183 days in India.
.03 If such stay exceeds 183 days in a Financial Year, such salary is taxable in India.
.04 Nature of services or generation of revenue out of such services are not directly material.
2. Capital gains or for that reason immigration matters do not have direct implications on taxability of such income.
.02 If your stay exceeds 183 days, your salary will be liable to tax in India.
.03 Under the circumstances, US company is required to deduct tax and comply with Tax Deduction at Source (TDS) / Withholding provisions of IT Act.
3. The company's tax implications may not arise in your case as you have mentioned that your services do not give rise to revenue generation.
.02 However, the US company should apply for Permanent Account Number (PAN) Card; Tax Deduction Account (TAN) ; deduct tax at source ; pay such tax into Government Treasury and comply with all the formalities and provisions of Withholding tax (TDS).
Best wishes.
RAJESH H DHRUVA [/INDENT]
I am still not clear, as there seems to be a conflict with the information in another thread (or I am missing something?).
Please refer to the thread below and let me know your thoughts
http://www.r2iclubforums.com/forums/showthread.php/17502-QN-for-Rajesh-Dhruva-Paying-Indian-Taxes-on-US-Income
USA employee working in India #12
[INDENT]Dear Sid,
1. An Indian citizen returning to India ; continuing to work for US company and also paid by US company in US$ in USA or India will have implications of Income Tax Act, 1961 [IT Act] and Double Tax Avoidance Agreement (DTAA) between India and USA.
.02 The said Treaty provides for taxation of salary income payable by US company to a person discharging duties in India to be taxed in USA if the stay does not exceed 183 days in India.
.03 If such stay exceeds 183 days in a Financial Year, such salary is taxable in India.
.04 Nature of services or generation of revenue out of such services are not directly material.
2. Capital gains or for that reason immigration matters do not have direct implications on taxability of such income.
.02 If your stay exceeds 183 days, your salary will be liable to tax in India.
.03 Under the circumstances, US company is required to deduct tax and comply with Tax Deduction at Source (TDS) / Withholding provisions of IT Act.
3. The company's tax implications may not arise in your case as you have mentioned that your services do not give rise to revenue generation.
.02 However, the US company should apply for Permanent Account Number (PAN) Card; Tax Deduction Account (TAN) ; deduct tax at source ; pay such tax into Government Treasury and comply with all the formalities and provisions of Withholding tax (TDS).
Best wishes.
RAJESH H DHRUVA [/INDENT]