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I am Indian citizen who was working in US from 15/11/15 to 31/03/16 i.e 137 days, that means I am resident tax payer like all other Indian citizens for FY15-16.

As per tax treaty they clearly mention I can claim credit for federal tax in India, but do not mention if other taxes like state tax, medicare tax, social security tax, etc can be claimed as deductions from income or non creditable deductions from tax?

So,

Logic 1 - India may not get tax credit for other taxes but can exempt the taxes that I have paid already on the income.

+ total tax on  India + us as per Indian income tax
- federal tax
- state tax
- medicare tax
- social security tax
- TDS deduced on Indian salary
_____________________________________
= my Net total tax?


***Or***

Logic 2 - If not able to give me exempt in tax then atleast allow exempt of taxes paid in income?

+ gross income in India
+ gross income in us
- state tax
- medicare tax
- social security tax
- deductions on Indian income as per 80C etc etc
_____________________________________
=  my total global income?

****Important**** Could you please provide me any citations which refer that state tax, social security tax & medicare tax paid in US can be considered as deductions from global income? I tried to search lot but could not find any?

If I do not get deductions on gross income or income tax - I will have to pay double tax except federal tax which is just 12% in USA, which means effectively I will have to pay 42% tax on my total income which is insane.

Please respond to me, as I have already missed advance filing date and do not want to get more penalty.

Thanks for the reply in advance.

  • I have same situation currently as you had last year. Can you please help in letting me know what was the final tax that you had to pay and what components of tax paid in US were not considered in India. Your reply would be really helpful as the date for final advance payment is approaching and I havent paid last 3 installments. Thanks – user54273 Mar 8 '17 at 18:25
1

Please consult a professional CA.

As per tax treaty they clearly mention I can claim credit for federal tax in India, but do not mention if other taxes like state tax, medicare tax, social security tax, etc can be claimed as deductions from income or non creditable deductions from tax?

As per the DTAA The deduction is only to the extent of Federal Taxes.

The computation would be in 2 parts.

First On India Salary, less of deduction, there is Indian Tax [T1]. 
Add US Income and arrive at Additional Indian Tax on US income [T2]. 
Say the US Federal taxes is [T3].
Arrive at Net Indian Taxes as T4 = T2-T3.
If T4 is negative, then total taxes is T1. Else it is T1+T4 
  • As per Indian income tax act for maximum benefits to assesee, if taxes that are not covered under DTAA can be claimed as per section 91 along with section 90? Can someone confirm this? – Amol Ghotankar Apr 7 '16 at 8:53

protected by Community Jul 28 '17 at 17:05

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