Income tax

snpathak (Querist) 05 January 2012 This query is : Resolved
assessee is having salary income from u.s.a and india boththe assessee's status is resident in india.he received salaryin u.s.a from resident u.s.a co and in india received from the same co situated in india.tell me inwhich form i should furnish my i.t.return for a.y.2011-2012.sothat i could claim t.d.s from u.s.a and t.d.s in india.

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Raj Kumar Makkad (Expert) 05 January 2012
When the Tax liability of an employee is calculated, the employer can deduct all permissible deduction such as certain investments, certain allowances etc. as per the Income Tax rule. The employee should declare his investments which may be deducted from their gross salary. These investments are come under section 80C of income tax Act and other related sections.

Let us see which investments are allowed to deduct from the gross salary or gross income as per income tax rule.

Under Section 80 C there is a list of financial instruments you can invest in for getting exemption. Under this section you can claim the total exemption up to Rs. 100000. It means Rs. 100000 or the sum total of all such investments in a financial year, whichever is less. Let us see which investments are eligible for getting exemption under section 80C.

Employees Provident Fund (EPF, GPF)

Employee’s provident fund (EPF for Private sector employees and GPF for Government employees) is a compulsory deposit as per the provident fund rule. At least the minimum amount must be deducted from employee’s salary by the employer and should be deposited in Provident Fund office or any related trust. (One can allow deducting more as voluntary contribution of provident fund) The provident fund amount may be enough to cover the maximum limit of Rs. 100000 under section 80C for higher salaried employees. The employee can get interest from the deposited amount and the interest is tax free as per the current income tax rules.

Public Provident Fund (PPF)

PPF is another good investment instrument which attracts exemption under section 80C. One can deposit a maximum amount of Rs, 700000 in a financial year in PPF and the interest on PPF also not taxable. This is a safe and good investment method and you can open it any post office or selected national banks. Read more about PPF

Equity Linked Savings Scheme (ELSS)

ELSS or Equity Linked Savings Scheme is a type of mutual fund where there is investing in equity shares and the lock in period is only 3 years. This is also considered as a tax saving instrument. The main advantage is that the lock in period is 3 years and other tax saving schemes has 5 years or more lock in period. This is a high risk investment, because the money is pooled to investing in Equity shares and the return also high.

Life insurance

All life insurance policy also qualified as tax saving scheme under section 80C. The premium actually paid for the financial year is eligible for deduction. But the premium amount in an year must not be more than 20% of the sum assured.

Unit Linked Insurance Plans (Ulips)

ULIPs are insurance plans with a combination of saving in mutual funds. This has two sided advantage is that the insurance and mutual fund saving will be do in one deposit.

Pension plans

Any recognized pension plan including new Pension Scheme is eligible for tax exemption.

NSC or National Saving Certificate

NSC is a post office investment scheme which has a tax saving benefit. It is a secured and safe investment scheme and the risk involved is very less. .Read more

SCS or Senior Citizen Saving Scheme

Senior Citizens Saving Scheme is a deposit scheme introduced by Government of India to provide a good return to senior citizen through a safe investment scheme and also ensure them a good regular income. This is also eligible for tax saving under section 80C.More about senior citizen Saving Scheme

Five year Tax Saving Fixed Deposits

To increase the popularity of Fixed Deposits 5 year special fixed deposits also allowed for tax exemption under section 80C. The lock in period is 5 years and the interest rate is around 8%.

Tuition Fee paid to recognized regular institution

Tuition fee paid for two children in a financial year also attracts tax deduction. Better you should pay tuition fee by cheque and get a certificate from the school or college. Keep in mind that only tuition fee is exempted and all other fee is not included in this exemption. Obtain a certificate from the education institution for availing this exemption.

Principal amount of home loan repayment

If you have taken home loan from a recognized financial institution you can claim the repayment of principal amount in the financial year. The loan and house should be in the name or joint name of the person who claims the exemption and the payment must be given from the bank account of the person who claims the exemption.

All the above mentioned items are for tax exemption under section 80C and the total amount of exemption is the total investment or Rs. 100000 whichever is less.

Shailesh Kr. Shah (Expert) 06 January 2012
file it return both country for that period, when you have received salary and claim tds.

R.Ramachandran (Expert) 06 January 2012
The DTAA Provisions are as under:
ARTICLE 15
INCOME FROM EMPLOYMENT

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in the contracting State in which the place of effective management of the enterprise is situated.

Thus, depending upon where the person is taxable, he has to file his returns in those jurisdictions.