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When Is Salary of Non Resident Based in USA Not Taxable In India?By djain128, Section Ask Questions Q I'm Indian Citizen, & US Green Card holder. Working in USA from Nov 1999 till now. Working for bigger telecommunication company and they have office in India & USA. I took a project in 2005 and required frequent business travel to India. I was travelling during 2005 & 2006 5 to 7 times and have spent around 180 days on each year. But none of my stay was more than 30 days and all are for business trips. I'm getting my salary in US. Do I still have to file Income tax in India? by junk_1208@yahoo.com Ans Since you are Indian citizen and you did not stay for more than 181 days in a year , you saved yourself from being treated as Resident. If that would have been the case, all income of yours whether earned in India or USA would have been taxable in India. However, since you are Non Resident as per Income tax Act, your income is taxable in India if
1. Any income is received in India Since you are paid salary by USA based company and received your salary in USA , conditions 1,2,3 above are not satisfied. As far as the last condition is concerned, there is specific provision for salary under section 9(1)(ii) which states that salary is deemed to accrue or arise in India "if it is earned in India." There is an explanation which declares that " income of the nature referred to in this clause payable for service rendered in India shall be regarded as income earned in India .This is a grey area and only judicial interpretation can clear the ambiguities . Plain reading of the Act shows that for the service rendered by you in India fro which you received salary should be treated as income earned in India and therefore even if you are non resident , same is taxable in India.So, prima facie' , your salary seems to taxable under I T Act.
The saving Grace!
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State, if : I find from the facts narrated by you , conditions 2(a) and 2(b) is definitely satisfied as you were not in India for more than 180 days in any one financial year and remuneration is paid by your employer which is not a resident of India. The third condition , you will have to check ,if your salary was borne by the permanent establishment (subsidiary) of your company in India . If Indian office of your company did not bear the salary paid to you , then DTAA protects you from being taxed in India. You should also be aware that it is legally settled that DTAA supersede I.T Act . For more on this read this article. Therefore , there is no need to file the return of income since your salary received in USA from MNC based in USA is not taxable in India by virtue of Article 16(2) of the DTAA signed between two countries.
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