How to calculate income tax if 7 months in India and 4 months in new Zeland

[Guest]

Hi there,

In FY 2012-13, my Indian income was from 01-04-2012 to 09-11-2012 and overseas (New Zeland) income was from 06-12-2012 to 31-03-2013. Both incomes are from salary only. My queries are:

1. Which ITR from I should use to file the return? (for previous years I had sued ITR-2 form)

2. I have a house property with three floors. I had rented out ground floor fully in FY 2012-13 and rented out 1st & 2nd floors for a period of 3.5 months (Dec 15, 2012 to 31-03-2013) since I have moved with my family to New Zeland in December 2012 and presently living in New Zeland. I have a houisng loan and earlier years I used to take interest of 1.5 lakhs into my calculations. In the present situation, do I have to consider 1.5 laksh or can I consider full HL interest in to calculations (I have paid 2.26 lakhs as interest on the loan in FY 2012-13)?

3. Is my income earned in New Zeland taxable in India? I receive my salary here after 25% tax is deducted by my employer every month. Please note I am still a RESIDENT of India. I am here on a WORK VISA.

4. How to combine indian and overseas income and file my return.

Your advise will be of great help.

Thanks & regards,

Prasad

[rinki todi]

Dear Sir,

BEing in new zealand on work visa will not be considered as the Income tax act determines the residential status on the basis of stay in India. In your case you have not mentioned the date when you left india.

However I would like to Comment that:

If you were in India for more than 182 days in the F.Y. 2012-13, than your global income will be taxable in India and you can claim relief under section 89 as regards the income earned in new zealand and taxes paid there. 

for further clarification you can contact me at [email protected]

 

[Guest]

Hi Rinki Todi,

Thank you very much for your clarification. For your info I had left India in first week of December 2012 which emans that I was in India for more than 182 days in the FY 2012-13.

Can you please help me in eloaborating on how to claim relief under Section 89? I under stood from your response that if the income is taxed in New Zealand, then we need not pay tax in India. Is this correct?

 

regards,

Prasad

[rinki todi]

Sir soory for quoting you the wrong section.  relief will be available under section 90.

1.    Relief under section 90:

 Eg.   -  In case of Resident individual.

Income earned in india = Rs500000

Income earned from foreign = 200000 (tax paid there = Rs.50,000)

 1. Total income is = 500000 + 200000 = 700000

2. Tax calculated on 7,00,000/-  is Rs. 71000/-

3. averge rate of tax is      ( 71000 / 700000)   = 10.14%

4.Calculate average tax on foreign income i.e. 200000 x 10.14% = Rs. 20800/-

5. TAx paid in foreign country is Rs. 50,000.

6. Hence relief u/s 90 is lower of 20800 and 50000, i.e 20800/-

 Therefore tax statement is,

 TAx on total income  = 71000

Less: relief u/s 90     = 20800  

Tax payable                50200/-  

AI Summary

Residency-based taxation: foreign salary included in worldwide income with tax credit relief under the tax-treaty mechanism. Residency-based taxation makes worldwide salary taxable if the taxpayer meets the stay-based residency test. Double taxation relief under the tax-treaty/relief mechanism is calculated by adding Indian and foreign salary to compute tax on total income, deriving an average tax rate, applying that rate to foreign income to get the allowable creditable amount, and allowing relief equal to the lesser of that amount and foreign tax actually paid; a numerical example illustrates the tax credit method. Questions on the correct return form and housing loan interest treatment were raised but not resolved.