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Is Singapore income taxable in India?
June, 21st 2008

I am presently working in Singapore. I have been in Singapore from May 1, 2008 and will continue to stay there until December 27, 2008.

Under such circumstances, will the income earned by me in Singapore be taxable in India?

If I were to transfer funds from my bank account in Singapore to my bank account in India, will there be any tax implications? Abhishek Agarwal

Under Section 6 of the Income Tax Act, an individual is resident in India if he satisfies any one of the following conditions:

He is in India for 182 days or more in the previous year.

He is in India for 60 days (182 days if he leaves India to take up employment outside India.

If he is a citizen of India or being outside India comes to India on visit if he is a citizen of India or a person of Indian origin) or more in the previous year and for 365 days or more in the four years preceding the previous year.

He is resident but not ordinarily resident if he satisfies any of the following conditions:

He is non resident in 9 out of the 10 years preceding the previous year;

He is in India for 729 days or less in the 7 years preceding the previous year;

If an individual is resident but is not resident but not ordinarily resident then he would be resident and ordinarily resident. An individual who is not a resident would be a non-resident.

You have through your query not clarified whether you have left India to take up employment in Singapore or you are just on an assignment in Singapore.

If you have left India to take up employment in Singapore, you would be a non-resident since you would not satisfy the first two conditions stated above.

On the other hand, if you have not left India to take up employment outside India but have gone there only on an assignment, you would be resident in India and presuming that you have been in India prior to May 1, 2008, you would be a resident and an ordinarily resident in accordance with Section 6 of the Income Tax Act.

In such a case, the income earned by you in Singapore would also be taxable in India, as Section 5 of the Income Tax Act would provide that in case of a resident and an ordinarily resident, the entire world income would be taxable in India.

You may, however, in such circumstances try to take the benefit of the Double Taxation Avoidance Agreement between India and Singapore, under which you could claim credit in India for the tax paid in Singapore, if the income is doubly taxed both in India and Singapore.

It is assumed that you would be a resident in India in accordance with Article 4 of the Double Taxation Avoidance Agreement between India and Singapore.

There would, however, be no tax implications merely as a result of your transferring funds from your bank account in Singapore to your bank account in India.

I had paid a rent of Rs 12,000 per month up to October 2007 after which I shifted to my own residence. This house was purchased by me in August 2007.

For this purpose, I had taken a loan of Rs 20 lakh from bank and I had also taken financial help from my parents and brother.

They had transferred funds from their bank balances into my account and had also transferred some shares to me, which I had sold through a recognised stock exchange, paying securities transaction tax at the time of sale.

These shares were held by them for more than a year, before it was transferred to me.

My employer has computed the tax, that is to be deducted at source, after taking into account the interest on capital borrowed from the bank and also the principal repayment to the bank towards the housing loan. I am told that I should have deducted tax at source on the rent paid by me, since it exceeds Rs 10,000 per month.

Is this correct? Will my parents or my brother or myself be liable for any tax in respect of the financial help extended by them to me?

Will I have to offer to tax the notional income of the property, though it is not let? George Thomas

You will not be required to deduct tax at source on the rent paid by you.

Section 194-I requires tax to be deducted on rent paid by an individual, only if the individual is subject to tax audit by virtue of exceeding the monetary limit specified in Section 44AB in the immediate preceding previous year.

Further, this Section only requires tax to be deducted at source on rent if it exceeds Rs 1.2 lakh per annum.

In your case, the rent which is paid up to October 2007 would not have exceeded Rs 1.2 lakh per annum.

Your query also does not indicate that you are subject to tax audit in the financial year 2006-07.

Therefore, there will be no requirement to deduct tax at source.

There will be no tax implications on the financial help extended by your parents and your brother to you. It is understood that the sums obtained by you from your parents is not in the nature of a loan, which bears interest payable by you.

Notional income from house property will have to be offered to tax only in case of a person who owns more than one house property and who claims that two or more of such properties is occupied by him.

If this were so, the annual value of only one such property can be taken as nil and of the other properties will have to be taken at the notional sum, which will be the amount equal to the sum that the property would have fetched by way of rent if in fact it had been let.

In your case, you have not stated that you own more than one house property. If this is the only house property that you own, the question of offering a notional rent to tax will not arise.

 
 
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