MK SINGHAL (PARTNER) 27 November 2010

TAXATION OF FOREIGN REMITTANCES

X is a young Indian boy of 25 years who is now living for last two yrs in Mexico. He is doing business there. He is regularly bringing lakhs of rupees in India as his income earned in Mexico for last two yrs. Income is being brought by him through his NRE account and also through wired transfer to his own and his father's account in India. He is depositing the money in FDRs in India and is earning interest on these FDRs and also from his past investments. His indian income is also taxable.

Whether he is liable to file IT return in India? What treatment shoudl be given to his income that has accrued to him in Mexico but is subsequently brought to India? If it is exempt from tax, under which section and where to fill this income in ITR form? If or not he is required to comply FEMA provisions also in respect of his money brought into India.

Reply Follow

3 Replies

Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) 29 November 2010

Deemed income Section 5 lays down that subject to the provisions of Income tax Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which accrues or arises to him outside India during such year. Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of Section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in india.

Asha Pole (Legal) 05 December 2010

Mr.Singhal

Firstly Mr.X does not fulfil the condition of being a resident since he is not in India for last 182 days and for second condition you have not specifically mentioned about his past days if he had been in India for 60 days in last year or more than 365 days in the preceding four years

And if he fails to comply with the above condition, being a non resident he need not file I.T returns in India. But then you will have to provide complete info about his stay in past.

Vineet (Director) 26 December 2010

1. The txability of Mexican Income depends upon residential status of assessee under Income Tax Act. If he is non resident or Resident but Not Ordinary Resident (please see section 6 of Act), only Indian Income will be taxable in India.

2. He needs to file his return in India if his income from all sources in India exceeds the menimum threshold limit i.e. Rs 1.60 Lakhs.

3. If he is non-resident, Income earned in Mexico is not taxable in India even if it is brought to India.

4. He can easily filehis return online at www.incometaxindiaefiling.gov.in. He will require PAN.