Taxability of non resident student

[NARESH GUPTA]

Hello all !! My query is :-

1. whether any sum received by a student gone to  USA from India on J1 visa for post doctoral  study initially for one year & later on period is extended to two years is taxable?

 2.Initially tax was not deducted for 1^st year but now on extension tax along with interest & penalty is demanded on earlier income also.

3.Is it possible to file return of Income in India for first year in which assessee was non resident in india ?

I just want to know whether i am required to pay any tax, & how can i reduce my tax liability & penalty?

Relevant text of DTAA is:-

Article 22 - Payments received by professors, teachers and research scholars - 1. An individual who visits a Contracting State for a period not exceeding two years for the purpose of teaching or engaging in research at a university, college or other recognised educational institution in that State, and who was immediately before that visit a resident of the other Contracting State, shall be exempted from tax by the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date he first visits that State for such purpose.

2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some other private person or persons.

AI Summary

Non-resident student on J1 visa exempt from tax for two years under Article 22 of DTAA. A query was raised regarding the taxability of income received by a non-resident student from India on a J1 visa in the USA for postdoctoral studies. Initially, no tax was deducted in the first year, but upon extending the stay to two years, tax, interest, and penalties were demanded for the earlier income. The query sought clarity on tax obligations and reduction of liabilities. According to Article 22 of the Double Taxation Avoidance Agreement (DTAA), income from teaching or research in the USA for up to two years is exempt from tax. The reply indicated that the income should not be taxable in India.