I am US Citizen with OCI status (being person of indian origin). I am working(salaried)and living in USA and visits India once a year for 4 or 5 weeks . I have 3 houses in India now and has only income from house property in India . I am planning to file Income Tax Return for 2017 in USA as well in India . Right now i am preparing USA Return because USA uses calendar year and will file India Return as NRI in coming June because India uses financial year . Please clarify the below in this regard : (1) I am filing USA Return right now and can file India return only after 31st March , thus i will have to first pay tax in USA on my total income (i.e., USA salary as well indian house rental) because of taxing global income in USA . Here , how will DTAA be used when i am first paying to US Govt. ? (2) In such situation , how will i determine about how much tax is paid in USA specifically for my indian house rental income ? (3) Which ITR Form will i use when filing my India return for only house rental income as NRI ? Any weblink for seeing that Form ? (4) Is there any column for DTAA in indian ITR Form and how to use it ? (5) How will i match the period difference of transactions of rental like 3 months different period in both returns i.e., 1st Jan.,2017 to 31st Dec.,2017 and 1st April,2017 to 31st March,2018 ? Will i need to consider consecutive 2 yrs returns to match ?
Hi
1. You have to use DTAA benefit in USA and not pay Indian taxes there. Show taxes accrued and pay them at the time of Indian tax filing.
2. Irrelevant.
3. ITR 2. Get it from incometaxindiaefiling
4. Schedule TR.
5. See 2 consecutive returns and calculate monthly tax applicable in 2 years to calculate tax for calendar year.
Hi
1. You can take the DTAA benefit while filing returns in USA. In the Indian return filing, you can show your income and then show the taxes paid in US and under DTAA take the benefit.
2. In the US, the taxes will be deducted on the house rental income at the applicable slab rates there. How will that change your return filing in India?
3. You need to use ITR 2 to file your returns in India. You can download the same from Income tax efiling site.
4. There is a specific place to disclose DTAA benefit in the returns. If you go through the return you will see these specific rows.
5. Yes, you will need to consider 2 consecutive years returns to compute this.
Hope this explains
Regards,
Nikhil
Dear Sir,
Claim taxes in USA return on accrual basis and thereafter revised the return after submitting the Indian ITR.
Thanks
It is too much confusion here in the two statements : (a) We can claim tax credit under DTAA only in the country of residence which is USA for me . (b) Tax is paid in that country first where the income is originated and it is India because I have 3 houses in India for rental . Please clarify : (1) What does accrual basis mean and how can I show india rental income in US return on accrual basis without actually paying tax on it in US return ? (2) If I show india rental on accrual basis in US return right now , will I be required to again revise the submit my US return after filing my India reurn in June of this year ? (3) Can I just pay tax on my india rental in my US return right now as per US tax rates and show that amount of tax paid on india rental in my India return which is to file in June ? (4) Which exchange rate do I need to use for all the conversion from USD to INR and INR to USD for showing the amunts in USA retun and India return ?
1. It means taxes have been due in India but not yet paid and will have to be paid on a later date.
2. I don't think so. An expert with US laws may help you best.
3. According to me, you won't get this credit in India. Think logically also apart from the laws, why would Indian government loose it's taxes to a foreign government. Taxes have to be paid in the country of origin of income and not only on residency.
Dear Sir,
Pay the tax on rental income of india in USA and claim the benefit of DTAA in India in July 2018. You can take the average rate of the period of rental income. I advised you this before also because you can claim the DTAA in India of the taxes paid in country of residence.
You can opt for phone consultation on tax full for further discussion.
Thanks
(1) Can anyone clarify about Which exchange rate do I need to use for all the conversion from USD to INR and INR to USD for showing the amounts in USA retun for india rent and later in India return for taxes paid in USA for india rent right now ? (2) As I understand from the above clarifications that first I can pay tax on india rent in my USA return right now as per USA tax slabs being resident in USA because I reside in USA for 11 months every year and later in July of 2018 , I can take credit of these in-USA paid india rent taxes in my India return as NRI in India and it is irrelevant that rent is originated in India , ........... am I right ?
You can use the Exchange rate from the RBI website.
regards,
Nikhil
As per Income tax act, the rate of exchange for house property income shall be telegraphic transfer buying rate of such currency as on the last day of the year.
You will have to figure out how this works in US. There would be similar provision in US tax laws.
https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates this may be helpful.
Hi,
The conversion rate totally depends on the US Laws.
Yes, you can take credit under Indian Laws but you will have to file an application with your assessing officer to claim the tax credit in your Indian returns.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Hello,
1. The exchange rate shall be dependent on the US Laws.
2. Yes, you can very well claim the tax credit in your India return but make sure to apply for the tax credit to your assessing officer beforehand.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
