Income Tax: You must have heard many news related to income tax that someone had to pay more tax. Such a case has come to light where a taxpayer of the country showed an income of Rs 9570 but had to pay the entire tax of Rs 43.5 lakh. However, there is a big reason behind how this happened which you will be surprised to know.
What to know about the rules of Income Tax Appellate Tribunal (ITAT)
Income Tax Appellate Tribunal has recently ruled that if a citizen has income in America then it will be considered taxable in India. After this, the income shown by an Indian citizen in the year 2012-13, which was Rs 9570, increased to Rs 43.5 lakh and this happened due to the treaty between India and America, because if this person is an Indian citizen. But the income earned in America was taxed in India.
Actually, behind this is the rule of the Income Tax Appellate Tribunal according to which the tax liability for the citizens who have residence in both India and America, will be made in the country where they have vital interests i.e. are important parties.
What is the whole matter, understand here
Understand it this way, those who are global mobile citizens are often seen as tax residents of two countries, for example, citizens of America and India. To resolve the issue of dual tax citizenship, there is a tie-breaker test which is It determines the tax liability of citizens in which country. In the tie-breaker test in the India-US treaty, the liability to pay tax has been considered on the basis of factors like permanent residence.
This is what happened in the particular case of this person because the person who showed an income of Rs 9570 had houses in both the countries but his important interests were seen to be more in India. Therefore, he was considered a tax resident of India but the income earned in America was considered taxable.
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