topic I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income? in Get your taxes done using TurboTax

I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Tue, 10 Feb 2026 10:16:46 GMT

I live and work in US and due to my accounts being there, I have filed Indian tax return and paid tax on overall income. (Due to the Indian tax system, I can't separate how much of the taxes paid is related to Interest income, how much related to dividends..etc.,)

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

Anonymous_ — Fri, 05 Jan 2024 17:48:51 GMT

@pk

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Fri, 05 Jan 2024 17:52:41 GMT

Dear Champ:

I did not see an answer. Not sure if you were trying to embed a hyperlink.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

Anonymous_ — Fri, 05 Jan 2024 17:53:50 GMT

No, just paging another Champ.

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Fri, 05 Jan 2024 18:57:07 GMT

Thank you. Let me know if you have an answer.

I paid tax to India when I filed the Tax return in April 2023 (Their tax cycle is from April 1st of each year to March 31st of next year - The taxes I paid was for interest, dividend, and capital gain income from April 1st of 2022 through March 31st of 2023). I have also paid the taxes for the same income to US . Looks like the system for claiming credit is setup in such a complex way, the tax payer at the end pays double tax!!!!.

When I tried to claim credit, Turbo tax asks how much of the foreign tax paid is from dividend, how much is from interest, capital gains....etc., . From a tax perspective, after all applied tax credits, adjustments...etc., by the Indian tax structure, it is impossible to segregate how much of the total tax paid to India was related to interest income, how much from dividends, capital gains....etc.,

Hence, the question was posted.

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

Opus 17 — Fri, 05 Jan 2024 19:09:04 GMT

@girigiri

Even though you only paid one tax bill, there must be a way to tell how much tax is associated with which type of income. (For example, if you prepared your income tax return without the capital gains and compare the differences, you would know how much is allocated to capital gains.)

I don't know if @pk has experience with an actual Indian tax return, but he is the best expert here to answer international tax questions. However, this is a bulletin board, not a live chat, and we are all volunteers. So there is no way to guarantee when he will see and respond to your question.

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Fri, 05 Jan 2024 20:00:00 GMT

Thank you Sir.

Is there anyway I will be able to take credit on the "overall tax" I have paid to India without going through the demarcation of how much was related to interest income, how much capital gains, dividends...etc.,

If not, I will have to just pay double tax (Since, it is extremely complex to unwind how much is being taxed for each of the category after applying their standard deductions and other tax elements)

Looks like the US filing is structured in such a way folks from other countries will turn away from the impossible task of doing the splitting / demarcation of how much tax was assigned to which category (due to the fact their tax structure is not designed similar to that of US) and just cough up US tax for the income for which they have already paid tax in another country.

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Fri, 05 Jan 2024 20:50:17 GMT

Since I can't categorize the taxes paid against each of the buckets (Ex: Dividend, interest income...etc., ) can I put the total tax amount paid to India in the column "Other Foreign taxes paid or accrued" as high lighted - (p) and (t)?

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

pk — Sat, 06 Jan 2024 02:57:00 GMT

@girigiri , having read through the thread what I get is that you have paid US$xxx as taxes to India on income US$YYYY for the Indian Tax year 04/01/2022 through 03/31/2023 and that you would like to ameliorate the effects of double taxation per US/India Tax Treaty. You are a US person ( Citizen/ GreenCard/ Resident for Tax purposes ).

1. The first item I would like to make sure that you have allocated the foreign income and the taxes paid i.e. you have annualize the income and the taxes levied/paid from the Indian Tax year to US Calendar year.

2. Really need more details as to what the foreign incomes were i.e. what was the allocated incomes by category -- interest , dividend and of course capital gain

3. Once we have allocated in comes for the year , you can generally allocate the taxes ratiometrically i.e. a straight line ( even though that may not be actually true but that is the best one can do unless it is actually possible to show that the interest income was taxed at a different rate than the capital gain for example.

As you can see from the above we need more info to be able to help you . IRS is not looking for an airtight logic but consistent logic and best effort to harmonize between different tax systems .

I will circle back once I hear from you

Sorry for the delay in responding

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Sat, 06 Jan 2024 15:43:13 GMT

Dear Mr. pk:

Thank you very much for your insight.

Based on your input, request your help / insight on how to allocate / annualize income and taxes for the US calendar? To give you a broader insight, I have enclosed below screen shot of an Example showing hypothetical structure and allocation among different buckets. (To avoid any confusion, I have shown the income per Indian tax cycle). If you need, I have also attached the example Excel file
Key question is how to allocate / annualize income and taxes for US calendar due to the fact, there is always 3 months gap. (2022 - 23 India return contains only 3 months of 2023 and 9 months of 2022)
When you mentioned ratiometrically, did you mean take the example data below of $36 tax paid to India and allocate 39% of $36 tax paid to India ($39 dividend income divided by $100 total income), allocate 31% of $36 and 30% of $36 to each of the 3 buckets of dividend, interest and capital gains?

Let me know your thoughts on the above key questions.

will be straightforward if one can just use the column "Other Foreign taxes paid or accrued" in the form 1116 for total tax amount paid to India without allocation in to different buckets.

Let me know your thoughts

Again, thanking you,

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Mon, 08 Jan 2024 22:47:17 GMT

Hi pk:

Just wanted to connect to get your thoughts.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

pk — Tue, 09 Jan 2024 02:55:08 GMT

@girigiri , please can you wait till tomorrow -- I am going through your spread sheet and will come back ( probably tomorrow -- PST )--- my very humble apologies

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Tue, 09 Jan 2024 14:33:13 GMT

Dear pk:

No problem.

Again, thank you.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Tue, 16 Jan 2024 02:40:17 GMT

Dear pk:

Just wanted to get your perspective on this.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

pk — Wed, 17 Jan 2024 03:24:48 GMT

@girigiri , please accept my apologies for delayed response. I see from the notes on your particular notes that

(a) first for the US 2022 return you would have to cover the earnings ( dividend and interests earned in calendar year 2022-- thus you have to add the earnings for the months Jan - March 2022 and delete the entries for the same months of 2023 ( as shown on your post/table ).

(b) You then have to create / compute average taxes for India's tax year 2022 + 2023 to come up with a defendable figure per US dollar of interest / dividend income -- you then apply to the total of interest & dividend earnings attributable for US ta year 2022. This is best approximation you can get.

(c) Once you have these figures under control, you n ow can allocate the total taxes paid to India for the Interest and dividend incomes for the tax year 2022.

(d) Now , for the Capital gains --- you have create a schedule D to enter the stocks/bonds that you sole during the year 2022 --- you need the name of the assets you sold , when bought, basis ( how much you bought these for including any commissions, how much you sold the lot for less any expenses such as commissions etc. --- and of course the taxes that you paid on this ( you may have to allocate based on average tax rate ).

Does this make sense ? Is there more I can do for you?

Namaste ji

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Wed, 17 Jan 2024 03:49:03 GMT

Namaste pk:

I just saw your reply. Let me decipher your input and will touch base.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Mon, 19 Feb 2024 04:28:05 GMT

Dear Mr. Pk:

Namaste Ji.

Still struggling on how to do this.

One thought process was if the Total taxes paid to india in April of 2023 (Ex: for dividend, interest income and capital gains earned in India during India's 12 month tax cycle of April 1st 2022 to March 31st of 2023) is say $120, can I divide this total by 12 months (Uniformly apportioning the total taxes paid to India of $120 across 12 months of April 1st 2022 to March 31, 2023 which in this example will be $10 per month ) and use the 3 month apportioned 2023 india tax burden of $30 ($10 for each month of Jan, Feb, March of 2023) as credit for the 2023. (Irrespective of whether the total tax liability of $120 was from dividends, interest income or capital gains - Just taking the total taxes paid during 12 months and apportioning it to for 3 months of 2023)?

Let me know your thoughts.

Regards,

Giri

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

surc-01 — Sun, 03 Mar 2024 15:05:13 GMT

I am in a similar situation as @girigiri but followed the approach and find out via the TDS deducted for FY and computing taxes for a specific US reporting year (e.g Jan23- Dec23).

While in this process the most super complicated thing is Schedule-D to list the buy/sale dates for each proceeds is time consuming and very complicated. I don't any update on the last thread can be do a average.

@pk Could you provide suggestion on listing details in schedule-D. In my case I have 20-25 different stocks including each one is tedious process. Is there a better way to report in a one line item?

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

girigiri — Sun, 03 Mar 2024 17:14:39 GMT

Hi Surc-01:

I have filed tax return in India for Indian income (Tax cycle: April 1, 2022 to March 31, 2023). Hence, I can't take credit for TDS....etc., because once you file India tax return, with all the tax credits, deductions....etc., everything will be consolidated loosing all clarity of how TDS and others get weaved in to the total tax liability. Hence, there is no clarity and the only thing that will be clear is the total amount of tax paid to India.
I started from there per below.
I think having different tax cycles, so called Foreign tax credit....etc., is designed in such a way that after folks look at the complexity, they give up and pay taxes in both countries Double taxation. That is what is desired by both the governments. Further, you also have to extend your 2023 return to October deadline due to the fact when all your Indian taxes are paid and settled for Indian income tax cycle of April 2023 to March 2024, US tax deadline of April 15th, 2024 will be gone!!!!!).
This is the first time, I am trying to do this. All previous years, I have just paid taxes for the same Indian income in both US and in India. IRS should be proud to know that more complex forms, so called credits, systems...etc., they generate, more free money will flow in without any questions!!!!. There are many folks in the same boat just paying taxes in 2 countries and taking it on the chin for being in US.

@pk : Please let us know if you have any other insight / suggestions.

Re: I have paid tax to India (Bank interest , capital gains, dividends) & how do I claim credit for it. Each category is not separated & have paid tax on overall income?

pk — Sun, 03 Mar 2024 18:33:00 GMT

@girigiri , @surc-01 , first my apologies for the delay in responding ( my wife passed and therefore i am still in the middle of last rites in Mexico ).

I think I understand what is proposed by @girigiri and have generally agree with process allocating the taxes [paid to India for the US claim of foreign taxes paid.

On your question about the schedule D entries for multiple stock transaction, some times , especially if all are through the same brokerage and the 1099-B they provide is summarized, you can use the summary to satisfy the Schedule-D requirements ( I say this because the AUR program at the IRS uses the brokerage info as the basis for comparison). If however brokerage provides you and the IRS the gory details of each transactions, then you have follow suit. Either way, you still have to maintain the details so you can sustain any challenge (if) from the IRS. It is a painful process.