28 June 2016 India tribunal rules on penalties and availability of split year residency under a tax treaty A recent tribunal decision has confirmed that penalty provisions regarding inaccurate information declarations and the concealment of income are discretionary in nature, and the conduct of the taxpayer should be considered when determining whether such penalties should be levied. The Tribunal also held that when a taxpayer is a tax resident of two countries (under their respective domestic tax laws), the residential status needs to be determined under the tie breaker clause of the relevant Double Tax Avoidance Agreement (tax treaty). This determination can be done on a split year basis so that salary income earned by an individual outside India, for the part of the year they are working abroad, is eligible for an exemption from tax in India. A Tax Alert prepared by EY's People Advisory Services group, and attached below, provides additional details. Document ID: 2016-1127 |
