Lower of Indian tax liability on the doubly taxed foreign income or tax paid in the foreign country may be allowed as credit.
By Chirag Nangia
My son went abroad for employment after August last year. Will he have to show overseas salary income in ITR?
—Amiya K Sen
Assuming your son was in India for 182 days or more, he was a resident in India during the relevant previous year. Resident individuals are liable to pay tax on their global income in India. Thus, while filing ITR, in addition to furnishing salary income in India,he has to report income derived overseas. Double taxation relief may be available in the form of credit or exemption, as per the DTAA with the respective country. The provisions of the I-T Act shall apply to the extent they are more beneficial to him. If no DTAA exists, he may get credit of taxes paid abroad under Section 91. Lower of Indian tax liability on the doubly taxed foreign income or tax paid in the foreign country may be allowed as credit.
Seek professional help for computation of income/ relief and proper compliance.
I last paid income tax three years ago as I was unemployed after that. Now I am investing in share markets. Should I pay income tax?
—Barath Kanna C
A resident individual is required to pay income tax if his/her gross total income from all sources is over Rs 2.5 lakh. Gains derived from sale of shares are subject to tax as ‘capital gains’. If your total income including capital gains, exceeds the basic exemption limit, then you have to pay tax and file a return of income. In case of equity shares, short-term capital gains are taxable at the rate of 15% (if STT has been paid) and long-term capital gains shall be taxable at the rate of 10% (if STT has been paid, gains up to Rs 1 lakh shall be exempt).
I have incurred medical expenses for my spouse and my brother for Rs 1 lakh each. Can I claim tax deduction?
Medical expenditure incurred for self, family or parents is eligible for deduction from your total income, under Section 80D if it is incurred in respect of senior citizens and no health insurance has been bought. The maximum permissible limit is Rs 50,000 in a financial year. To claim this deduction, amount must be paid in modes other than cash. However, a brother does not fall within the definition of ‘family’ under the Act and hence, no deduction can be claimed in respect of medical expenditure incurred on your brother.
The writer is director, Nangia Andersen Consulting. Send your queries to email@example.com