Tax query Singapore/India

Hi Anupam,

It depends upon the residential status of your wife. Let us know her stay (in terms of number of days) in Singapore and India in last 5 years to evaluate her residential status.

If she is resident in India, most probably she will be taxable in India for her salary. However, there are certain exception to it.

Once we get to know her stay in India and Singapore, we will be able to evaluate.

Income earned in India is considered as Indian income and income earned outside India is considered as foreign income. However Indian income or foreign Income is important. For the purpose of taxation, income may be earned from salary, house property, business, capital gain or any other source. Classification of such sources of income into Indian or foreign income will be decided on the basis of place of earning/accrual of income and place of receipt of income. Following table will help u to understand when an income is considered to have been earned in India.

Sr No. Condition 1 Condition 2 Status of Income

1 Received In India Earn/accrued In India Indian Income

2 Received outside India Earn/accrued In India Indian Income

3 Earn/accrued in India Received Outside India Indian Income

4 Received outside India Earn/accrued outside India Foreign Income

The Answer for your questions are

01. Even though she receives in her Singapore account she is liable to pay tax in India.

02. If She receives as consultant fee in Singapore from India she needs to pay for Singapore. Also 10% TDS would be deducted if she has a Permanent Establishment in India as per DTAA

Hi Anupam

The taxation for your wife shall depend upon her residential status. If she is a resident of India, all her global income shall be taxable in India irrespective of the fact whether it is salary or consultancy fees.

Let us know the residential status for further details on taxation.

For the Financial year 2017-18 she need to pay tax in India.

Permanent establishment -

This is a wide base concept but for your reference i would give you a note to the DTAA article 5 (3)

For Service/ consulting Permanent Establishment means if an enterprise furnishes services (including consultancy services) through employees or other personnel engaged by it for furnishing such services, a PE would come into existence if such activities continue for a period or periods aggregating more than six months within any twelve month period.

if this concept was not attracted the TDS wont be deducted to her. so she needs to pay tax in Singapore not in India

Subject to Residence rule 2 if she Comes to India and stays for 60 days in India in the financial year 2018-19 then she needs to pay for the entire income earned in India and in Singapore. So kindly look this factor also.

Hi,

In all these cases, if the payment of salary is made by an Indian employer, he would be required to deduct taxes @ slab rates (10/20/30 as the case may be). You wife may qualify as Non resident of India and as such, all incomes which are sourced or received are taxable in India. Even if you shift the receipt of salary to Singapore, it is still sourced in India and may not be able to escape Indian taxation.

Irrespective of nature of payment, salary or professional fee, the tax treatment won't change as far as India tax incidence is concerned, receipt or source sitting in India will trigger Indian taxation.

I am not a Singapore tax expert but can connect you with one if you need assistance.

Thanks

Damini

It will depend on her residential status. Since she just moved in Jan 2018, all her global income will be taxable in India as she will continue to be a resident of India.

Hope that clarifies.

Regards,

Nikhil

As we understand that your wife is in Singapore and providing the services to her employer who is in India . The salary get credited in the Indian Account .

On the issue of salary , the law is that the salary is taxable where it is earned . The earning of the salary has to tested with the place where she is rendering the services . In your case the place of services is in Singapore . Hence the income is not earned in India . The employer is in India or he makes the payment in Indian bank account or any singapore bank account does not change the liability of the salaried employee as in this case she is taxable in singapore and not in India . Another very interesting situation that comes out that due to her employment there , the Indian employer can have a service PE in singapore . I am not sure whether your employer is aware of that or not .

On this issue of Consultant , the consultancy fees would be taxable in India as FTS and will be subject to TDS of 10% u/s 115 A plus surcharge if any . She has to file the ITR as per 115A. However if she is the tax resident of Singapore , she can claim the benefit of DTAA.

Dear Sir,

First we need to determine her residential status in India. As you said she left Indian on 19.01.2018 to work in singapore so she will be considered as resident in India as her no. of stay in india exceeds 182 days. Therefore her global income is taxable in India irrespective of the place from where she is providing service and the bank account in which she gets salary. The thumb rule is residency.

For F.Y. 2017-18 (i.e. A.Y. 2018-19) her global income is taxable in India as she is ROR.

Considering she would be NRI in F.Y. 2018-19 - If she becomes consultant then also company in India needs to deduct tax from her consultancy income and she can claim the benefit of DTAA in the country of residence.

I am not aware of the singapore taxation laws. You need to consult professional in singapore for her residential status and ITR filing in singapore.

Thanks

It is not the nature of work but the residential status that matters. Even if she becomes a consultant and stays for more than 182 days in India, her income will be still liable to tax in India.

However, i guess, your wife will be a non resident of India in 20180-19 and so her income will be taxable in Singapore.

She can take the benefit of DTAA for the tds that would be deducted in India from her income.

Regards,

Nikhil

Hi,

For FY 2017-18, she will be Indian tax resident and her salary will be taxable in India.

From next year onwards, if she continues to be payroll on Indian employer her salary will be taxable in India at the slab rate (I.e 5% to 30%). Employer will deduct TDS as per slab rate.

If she choose to be a consultant, her income will be taxed in India as FTS @10% and TDS deduction will also be @10%. However, since she will be a Singapore resident next year onwards, she can claim dtaa releif in singapore for the taxes paid in India.

Taxability depends on Residential status of your wife.She moved in Jan 18 so for FY 17-18 she will be resident of India and all her global income will be taxed as per Indian Income Tax laws.

Hi

For FY 17-18, her income shall be taxable in India since she was resident in India.

From FY 18-19 onwards, since period of stay outside shall become more than 182 days in the year, she should be NRI. If salary is credited to Indian bank accounts, it will be taxable in India. If it is credited in Singapore bank accounts, it will be taxable in Singapore. Same would apply to consultancy fees.

If the salary/fees is taxable in India, then only TDS should be deducted. If at all the company is deducting TDS, you can claim credit of such taxes while filing the tax returns in Singapore.