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Tax impact on employees leaving India, Salary part for Taxation and filing of IT return


CA Pulkit Sharma

2014-02-02

Should the employee leaving India file the Income Tax Return?

The answer depends on his taxable Income in India. As per the Income Tax Act, every person whose Income is taxable in India Shall file the Income Tax Returns*.

Before we move towards answer to the above faq, its adviced to refer the following different provision of Income Act, 1961.

Resident status of Individual(Section 6)

Income Deemed to accrue in India(Section 9)

Who need to file the Tax Return in India(Section 139)

The steps to check whether one Should file the Income Tax Returns are:

  1. Check whether the income is accrued in India, In case of Employees the salary earned in India is always deemed to accrue in India.
  2. Check the residential status, in case of Individuals if was present in India for more than 60 days in India in previous year he is resident.

If the salary earned in India was more than taxable limit he need to file the income tax returns.

A graphical presentation of above facts is below for reference.

Tax impact on employees leaving India, Salary part for Taxation and filing of IT return

CA Pulkit Sharma

2014-02-02

Please sign up and ask your specific questions on this forum. I wrote this after getting many calls from readers.

Plase respect the privacy and limit the discussions to this forum only. Only professional querries can be asked on phone.

Thank you

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Gururaj Panamalai

2014-07-10

I had a specific question. I was in India until January. I was paid for February and March in US salary. Are these two months of income taxable in India? 

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Rahul Rai

2014-07-11

Yes its taxable in India. Because you are resident in India as per income tax act and your income will be taxable in India.

However you can take credit of tax already paid in USA by you.

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