Remittance its taxation: How will it impact you?

Once an amount is received by the individual then its remittance of transmission to any other place would not be a taxable event under the income tax law. This makes it important for the individual to see whether there is a receipt of the income that has taken place and when they transfer the money whether this is actually remittance for them.

Arnav Pandya

There is an important concept in taxation which needs the attention of individuals because this is an area that is often the cause of several types of confusion. The question is with respect to the earning of income and when this is going to be taxed. There is also the issue of what actually represents a situation where the income would be taxed and hence the finer details related to the whole transaction needs to be considered. This gives rise to the issue of looking at the question of receipt versus remittance and hence the individual should pay attention to this aspect.

How this is raised
A lot of people get worried over the fact that the money that they have would be taxed at a certain stage. This happens a lot to people for example who have earned some amounts abroad but then have transferred the same to India in their bank account. This would give rise to the question as to whether the amount would be taxed in India when this comes back to the country and is often a big worry for a lot of people when they move their own money around. There is no need for them to worry on this front because a bit of attention to the details will ensure that their position is clear.

Receipt of income
The first thing to understand in the whole process of taxation in India is that this would happen at the point of the first receipt of the income. The receipt of the income is nothing but the first occasion when the receiver gets the money under his control. This means that this becomes the starting point of the entire chain of the income and hence this is a crucial area to consider. The receipt for salary becomes the time when this is due or it is received whichever is earlier as this is the time when the individual gets the right to the salary and hence this is the income that is actually earned by them. The receipt becomes the time when the taxation would kick into play and this would ease the position on the further use of the income.

Remittance
Once an amount is received by the individual then its remittance of transmission to any other place would not be a taxable event under the income tax law. This makes it important for the individual to see whether there is a receipt of the income that has taken place and when they transfer the money whether this is actually remittance for them. Thus for example when a person who is abroad sends some money to their own account back home then this would not be the situation of an income as this is the own money of the individual that is just being transferred.

This is the situation even if the amount that is earned abroad is received in the bank account of the individual abroad and then this is brought into the country. The key part is when the income is actually receipt as compared to the position where this is transferred to the country. There is a very clear position that when the amount is already earned abroad and all that is done is that this is remitted then there would not be a tax liability that would arise in the sense that this would not be considered as income that is earned again. This ensures that people should not worry when they are transferring their own income or money and they can plan for the use of the money in an effective manner.