J-1 visa tax situation in India

[Sbs0515]

I am a citizen of India currently in the US on a J-1 visa for a year. I will be exempt from taxes in US if I sign the India-us tax treaty. However, I would like to know what my tax situation in India would be. Will I have to pay taxes in India based on India's tax slab for the earnings in US on the J-1 visa?

[Anonymous_]

@pk?

[pk · Accepted solution]

@Sbs0515 ,Namaste

As a Non-Resident of India ( i.e. Indian citizen, whom is domiciled abroad temporarily ), living in the USA on J visa, your US sourced income is exempt from US taxes  per the US-India tax treaty.   As a researcher / teacher , the treaty exempts you from US sourced income  from the J-1 activities.  However, if you have other US sourced income, then the treaty is silent about that.

Indian Taxes are on "Resident" basis  -- it world income on residents only.   Since you are a resident of US during your sojourn in the USA you are immune from  Indian taxes  on US source income.  Indian sourced income may still be taxed  as a non-resident.

Does this answer you query ?   Is there more help you need ?

Namaste ji

pk

[Sbs0515]

Hi @pk

Thanks for your response. I was in India upto August 2023 and I was earning in India. That does make me resident of India during this financial year right?

[Sbs0515]

@pk Basically I have been in India for around 130 days before coming to the US. If I am not considered as a resident of India for the financial year, does that mean my income in the US is not being subject to tax either by India or in the US?

[pk]

@Sbs0515 , 

  generally the wording of  a treaty makes it pretty clear whom can tax the income  such " only may be taxed" or  "can also be taxed by ..".  In case of Tax treaty with India  it just says that the "researcher ", while engaged  in research  for public benefit is exempt  from taxation on the wages etc. -- so the lack of any mention of  " may also be " taxed language  leads me to believe that the exemption  of taxation applies to  both ;parties since the income is sourced to only one of them  and  where the  "researcher " is currently residing.

I have tried to peruse the Indian  tax code  ( it is extremely difficult to view the code with any specificity and site is very low on "useability scale " -- IMHO ) and there is no mention of this under international or otherwise.  The residency clause  generally uses  one of two tests.

I therefore surmise , and assuming g that you are here for  "public  benefit " research at an educational institution, your earnings  in the USA from this effort is  no taxable to the USA .  You also had/ have to file a form  8233 with your employer ( suggest you consult your school " foreign students " office -- they have a lot experience in this area ).

You still have to file India  return for the period of the fiscal year  that you earned in India.

Does that make sense to you ?

pk

[Sbs0515]

@pk It does make sense to me. Thank you.