Do I have to file Schedule TR if I claim no relief?
No. The schedule is the summary of relief claimed, so it exists because a claim exists. If you have foreign income but claim nothing against the Indian tax on it, either because no foreign tax was borne or because you have chosen not to claim, there is nothing for the schedule to summarise. The point to watch is the difference between claiming nothing and claiming nothing successfully. The foreign income still has to be reported, and a decision not to claim relief is worth recording on the file with its reason, because the same facts will raise the same question next year and the answer should be consistent.
I paid tax in two countries, does that mean I file Schedule TR?
Only if you are resident in India for the year and you are claiming Indian relief for the foreign tax. Paying tax in two countries is the fact that usually leads to a claim, but it is the claim that brings the schedule, not the double taxation by itself. Somebody taxed abroad who is non-resident in India for the year is not claiming Indian relief and does not reach the schedule at all. Somebody resident in India who bore foreign tax and wants it set against Indian tax does, whether the relief comes from the agreement with that country or from the unilateral relief that applies where there is no agreement.
What is the difference between treaty and unilateral relief here?
Treaty relief comes from an agreement between India and the other country and follows that agreement's rules for the class of income concerned. Unilateral relief is Indian domestic relief, available where there is no agreement with the country in question. Both are claimed through the same schedule, and the schedule asks which one you are relying on, country by country. The distinction decides what evidence carries weight. A treaty claim turns on the article covering that income and on your residence for treaty purposes. A unilateral claim turns mainly on proof that the foreign tax was borne on income that India is also taxing.
Does an employee with foreign salary and tax deducted file this schedule?
If they are resident in India and want the foreign tax set against the Indian tax on that salary, yes. Deduction at source abroad is not itself the claim. The claim is made in the Indian return and summarised in the schedule. Two things trip up salaried cases. The tax finally borne abroad may differ from the amount deducted, and it is the settled figure that belongs in the schedule. And a single assignment can straddle two Indian tax years, so the salary and the foreign tax have to be split on a consistent basis before either figure is entered anywhere.
Who files Schedule TR when the income sits in a joint foreign account?
The person taxed on the income files, and that is not always the person named first on the account. Relief is claimed by the resident on whose income the foreign tax was borne, so the starting point is whose income it is under Indian principles, and then whether that person in fact bore the foreign tax. Where the foreign tax was assessed on a joint basis, the claim has to be apportioned and the apportionment has to be explained. Joint holdings also need to sit consistently with the way the same account is shown on the foreign income and asset sides of the return.
Which country goes in Schedule TR if income passes through a third country?
The country whose tax you are claiming relief for, not the country the money travelled through. A payment routed via an intermediary bank or a paying agent elsewhere does not create a claim against that place. Relief follows the jurisdiction that taxed the income. The difficulty is evidential rather than legal: a remittance advice often names the routing bank and not the taxing authority, so the schedule ends up naming a country whose assessment does not exist. We take the country from the foreign assessment or the deduction certificate, and treat the banking trail as support for the amount only.
Do American citizens living abroad have to pay taxes?
American expats and green card holders need to file US returns for life, and many of them pay little or no US tax once the relief is applied — but the filing is what unlocks the relief, so the two questions have different answers. The exclusion for foreign earned income, the credit for foreign tax already paid and the treaty between the two countries between them usually leave the total at roughly the higher of the two countries' tax rather than the sum. Skip the return and none of it applies. See Americans abroad.
What counts as foreign income, and what is a foreign tax?
Foreign income is income sourced outside the country you are filing in — where the work was done, where the property sits, where the payer is resident, depending on the type. A foreign tax, for credit purposes, is a levy imposed by another country that functions as an income tax and that you were legally required to pay. Consumption taxes, property taxes and most social contributions are not, however real the cost. Sourcing is decided by rule, not by which bank received it. See the foreign tax credit.
