I have been staying in Stockholm, Sweden, for a project, for the last 18 months on a per diem basis of 500 Swedish kronor per day. I have saved around ₹10 lakh till now and I wish to transfer this money to my spouse’s bank account in India. I am not required to pay any taxes in Sweden as the amount that I am getting is not a salary but a per diem amount. I want to know that whether the amount that I have saved will be taxed if I transfer it to my wife's bank account in India. Please let me know how to save the tax, if any, on this amount.
Jaideep Das
As per the provisions of the Income-tax Act, 1961 (‘the Act’), the scope of total income chargeable to tax depends upon the residential status of the taxpayer which, in turn, is based on the number of days an individual is physically present in India during the relevant financial year (‘FY’).
An individual qualifying as Resident and Ordinarily Resident (‘ROR’) is subject to be taxed on worldwide incomes in India (subject to the relief under the respective Double taxation Avoidance Agreement or the Act), whereas an individual qualifying as Not Ordinarily Resident (‘NOR’) or Non-resident (‘NR’) is subject to be taxed only on the incomes received/ accrue or deemed to accrue in India (except in case of NOR where such income is derived from a business controlled in or professional set up in India).
As per the provisions of the Act, any special allowance granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily expenses on account of absence from the normal place of duty is exempt from tax to the extent to which such expenses are actually incurred for that purpose.
I understand that you are currently working on a project outside India and have received per-diem in Sweden from your employer out of which you wish to transfer the amount saved to your spouse’s account in India. In view of the above discussion, the per-diem amount saved by you while on assignment outside India shall be taxable in your hands as salary income for the FY in which such amount is received subject to your residential status for that FY. Transfer of funds to spouse’s bank account in India does not trigger taxation.
Further, there are no specific exemptions/discussions against per-diem amounts saved. However, you may invest under eligible investments avenues for which deduction is available against taxable income. Please be advised that the income earned by your wife from investing this amount shall be clubbed with your income and will be taxable in your hands.
The writer is a practising Chartered Accountant. Send your queries to taxtalk@thehindu.co.in
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