Tax in India on US payCheck

[abhi1024]

I came to US On September 30, 2024 and filed the taxes as a resident for year 2024.

I pass the SPT, because I have been in US in 2022 and 2023.

For the purpose of calculating India Tax, my employer is adding all US paychecks from October 2024 to March 2025.

Is this correct? Do I need to pay taxes in India for my paychecks in US.

[pk]

@abhi1024 , need a whole bunch of info to truly understand the situation you are describing.

(a) When did you enter the US and with which visa ?    Exact dates please .

(b) How many days did you spend  during 2022, 2023 and 204 ( before entering with the new visa ) ?   Or was this  an adjustment of status  in 2024.  What I need to understand is whether you are  a Resident or Non-Resident for the Tax year 2024.  

(c)  Are  you an employee of an US entity or  as a visiting / temporary  visit  employee of an Indian entity ?

(d) Did you employer issue a W-2  ?   Did the employer withhold  FIC A/Federal/State Taxes ?

In your answer , please provide as much detail as you can so one can understand the  situation in  totality.

pk

[abhi1024]

Hi @pk , here are the details

(a) When did you enter the US and with which visa ? Exact dates please .

      September 30 2024, on H1B

(b) How many days did you spend during 2022, 2023 and 204 ( before entering with the new visa ) ? Or was this an adjustment of status in 2024. What I need to understand is whether you are a Resident or Non-Resident for the Tax year 2024.

2022 - almost full year, vacation to India for 40 days

2023 - 153 days

2024 - New Visa (H1B extension)

As per SPT, I am a resident for 2024.

(c) Are you an employee of an US entity or as a visiting / temporary visit employee of an Indian entity ?

Yes, Employee of US entity.

(d) Did you employer issue a W-2 ? Did the employer withhold FIC A/Federal/State Taxes ?

Yes, I have a W2 with all the deductions.

[pk]

@abhi1024 ,  

(a) alright -- based on the days present that you have described,  you are a Resident for Tax purposes for 2024.  Your  resident start date is the first day t of the year hat you were legally present in the US.

(b) For 2024 , your  Sept.30 onwards  till the end of the year you are a resident.  And therefore your W-2 for 2024 should be covering all your earnings from employment  for that period.

(c) I don't see why your Indian  tax return should include  any earnings from the USA ---- 

" For the purpose of calculating India Tax, my employer is adding all US paychecks from October 2024 to March 2025.

Is this correct? Do I need to pay taxes in India for my paychecks in US."

Are the two entities -- the US employer and the Indian employer one and the same  or one is wholly owned by the other ?   Your Indian ITR should only  cover earnings in India till the day you left the country --no?

OR are they using the treaty condition of 183 days to be a resident ?   That is not applicable here because  US uses  SPT. And once you are a resident,  only one party can tax you ( generally ).   AS you can see I am confused  as to your employer.  Please tell more.

[abhi1024]

Hi @pk ,

My employer is an Indian company and I am on deputation to US.

They are citing the Indian IT act that considers an Individual resident for staying 182 days in a tax year.

They also mentioned that they have deducted the FTC from the US earnings for tax calculations. But they want to report my US earnings to Indian income tax in form16.

[pk]

@abhi1024 ,  you have to look at your agreement with your employer.   I know for a fact  when I was in a similar situation , my US employer used my US income and my foreign income to create a Gross-up  and on top the of agreement to  keep my hypothetical US taxes the same, created more complex issues.  Companies  do this all the time.  So I would suspect that the your Indian Employer is on correct legal grounds.    I would suspect that you are getting paid both in India and the USA. and paying taxes in both India and the USA.

IMHO, they are probably correct -- depends on what the actual agreement calls for.  I would not rock the boat without clear understanding of the agreements  for the deputation.

Is there more  can do for you ?