Dear
Jigs,
The taxability of the amount transferred differs if you are a Resident Indian
and if you are a NRI and transferring money to India.
There is a Double Taxation Avoidance Agreement between India and Netherlands
which says if he is a resident of India and pays taxes in Netherlands for his
income earned there. There will be a deduction in tax to that effect.
For
transfer of money from Holland to India, there will not be any taxation. You
can transfer money via your NRE account.
The said article is given as under
ARTICLE
15 - Dependent personal services - 1. Subject to the provisions
of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar
remuneration derived by a resident of one of the States in respect of an
employment shall be taxable only in that State unless the employment is
exercised in the other State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of one of the States in respect
of an employment exercised in the other State shall be taxable only in the
first-mentioned State if :
(a) the recipient is present in
the other State for a period or periods not exceeding in the aggregate 183
days in the fiscal year concerned, and
(b) the remuneration is paid by,
or on behalf of, an employer who is not a resident of the other State, and
(c) the remuneration is not
borne by a permanent establishment or a fixed base which the employer has in
the other State."
Therefore as per general rule in Article 15(1) since you are carrying
employment in Netherland , it should be taxed in Netherland only . However , I
find that if you do not stay in Netherland for 183 days in the year in which
you earned the salary ,Article 15(2) makes your salary taxable only in India. Therefore,
you must stay in Netherland for at least 184 days even if the
employment contract is only for 180 days (6 months).
If the salary earned in Netherland becomes taxable in India, there is nothing
to worry as there is relief mechanism provided in DTAA in Article 23 ( 4) as
under
Article
23(4).
In India,
double taxation shall be eliminated as follows:
Where a resident of
India derives income or owns capital which, in accordance with the provisions
of this Convention, may be taxed in the Netherlands, India shall allow
as a deduction from the tax on the income of that resident an amount equal to
the income-tax paid in the Netherlands, whether directly or by deduction"
Warm Regards,
Shweta Jain
Cetified Financial Planner (CFP)