Share of profit in US LLC
I am an indian resident and partner in US LLC. I am paying tax on the share of profit in us llc by filing my return of income in usa. I want to know how to include the income from share of profit from US LLC as the share of income from partnership is exempted as per the Indian Income tax Act. If it is to be included with my other income in India and taxed in India then whether I will be entitle for the rebate for the taxes paid in USA.
Asked 5 years ago in Income Tax
Thanks every body for good answer. As per the provisions of income tax Act Indian Resident has to include the foreign income in the same head of income and if I show it as share of profit under the head business income it will be exempted u/s 10(2) of the IT Act. So under what head of income I should add the income.
Secondly as per the US India DTAA the income of the partnership is to be taxed as per the residence of partner and not as per the resident status of the firm.
For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature, provided however, that
a. this term does not include any person who is liable to tax in that State in respect only of income from sources in that State; and
b. in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that State as the income of a resident, either in its hands or in the hands of its partners or beneficiaries
As in my LLC 94% of share is held by Indian resident partners and share of profit to be taxed on the resident basis so this cannot be taxed in USA either in the hands of firm as it is pass through entity nor in the hands of partner on residential status basis. So what I feel is that I may have to file the return of total income of the US LLC in India as a partnership firm and pay tax on the income and declare the share of profit in the hands of partners as exempt income u/s 10. Am I correct.
OR
I include the share of profit from LLC to my other income in India and claim the relief for the taxes paid in USA in my personal return.
Asked 5 years ago
