I am currently employed with a UK-based company and I work from home, in India. I get paid in UK pounds every week. Can I get double tax scheme? Also, I have received bonus for(Financial Year) FY 2016-17 this year. In which FY will the same be taxable if the bonus corresponds to last year?
Answered on February 11,2020
Since you live in India and do not live or work outside India, you are likely to be a resident of India for income tax purposes. For an individual who is a resident in India, income earned anywhere in the world is taxable in India. Therefore, payment received by you from the UK will be taxable in India. If the UK employer is deducting taxes before making a payment, you can take the benefit of the Double Taxation Avoidance Agreement (DTAA) between India and the UK. This will ensure that your income is not taxed twice; first in the country of origin of income and then again in the country of residence of the taxpayer
DTAA allows you to claim credit for tax paid in the UK from the tax to be paid in India. Bonus and other forms of salary payments are taxed on due or paid basis, whichever is earlier. If you did not include your bonus in your income tax return in FY 2016-17, you can do so now, in the year in which it has been received. You can include it in your income for FY 2017-18 at the time of filing tax returns and pay advance tax on it to avoid penal interest.