• US-India tax treaty benefits and withholding rates

I am an Indian citizen and currently a non-resident alien in the USA for tax purposes. I am on a H4 VISA. I want the Retirement Separation Refund from State Universities Retirement System (SURS), Illinois from my postdoctoral work at the University of Illinois at Urbana-Champaign. I have to fill W-8BEN tax withholding form to get the separation refund. SURS is withholding 30% of the refund due to the non-alien status. What special rates and % rate of withholding as per claim of tax treaty benefits between the US and India should I fill in Part II of the form?
Asked 1 year ago in Income Tax

If you are fulfilling conditions of Article 22 of India -USA treaty then you can claim the benefit under it. 

 

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4950 Answers
1105 Consultations

Since you are non resident in India and presently having citizenship and residency in India you will have to go for the local tax in USA only.

 

However at the time of filing of return you may claim "Foreign Earned Income Exclusion" to claim back refund and pay tax at lower rate in USA

Vishrut Rajesh Shah
CA, Ahmedabad
940 Answers
39 Consultations

Are you a tax resident in India or a non-resident in India as well when you are withdrawing the fund?

 

As you were a professor in USA you must be staying there.

Also, were you on payroll of university?

 

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4292 Answers
101 Consultations

Hello,

 

If you are a non-resident alien in the USA and you fulfill the conditions of Article 22 of the India-USA tax treaty, you may indeed be eligible to claim benefits under that article. It's important to carefully review the specific provisions of the tax treaty to ensure your eligibility.

As a non-resident alien in the USA, your tax obligations will primarily be determined by US tax laws. You will generally be subject to US tax laws and file a US tax return. However, there may be provisions within the tax treaty that provide certain exemptions or reduced tax rates for specific types of income.

When filing your US tax return, you can explore options such as the Foreign Earned Income Exclusion (FEIE) to potentially lower your US tax liability. The FEIE allows qualifying individuals to exclude a certain amount of foreign earned income from their US taxable income. By utilizing the FEIE, you may be able to reduce your US tax liability and potentially receive a refund.

 

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

 

Shubham Goyal
CA, Delhi
349 Answers
7 Consultations

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