Friday October 5, 02:08 AM
...going gets tough for pros; can't evade tax on foreign income
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By Economy Bureau
If you are an IT professional going abroad for an overseas assignment for your company, you may come back a little poorer instead of with big bucks. The Authority of Advance Rulings (AAR) has said such employees cannot escape from paying tax on the income earned during a deputation with their employer's foreign associates. Income tax will have to be paid in India, if it was not paid in the country of deputation. Employees cannot take refuge under the double taxation avoidance agreements (DTAA) in such cases. The ruling comes in a case between the tax department and Infosys employee S Mohan, who was sent to Norway on deputation. Mohan had claimed the status of a non-resident Indian for tax purposes as he was out of the country for 183 days in 2005-06. An NRI status would mean that he would not be liable to pay tax in India on the income earned during deputation. The AAR ruled that as Mohan did not provide proof that he was taxed in Norway, he was liable to pay tax in India and was not eligible to get any relief under the DTAA.
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