Tax credit on foreign income

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  1. DeepakH

    DeepakH New Member


    I have returned back to India 7 years back so for tax purposes I am ordinary Indian resident.
    I have foreign interest and dividend and capital gain from USA investments. my effective tax rate in US for 2005 is 18%. but the slab wise tax on tax on these income could be different.

    Question 1
    when I do my Indian taxes what tax rates do I use for the above incomes.
    option 1:
    foreign interest, dividend and STCG - regular slab rates which may be 30%
    foreign LTGC: 10% or 20% with indexation
    option 2:
    use the special rates as given in DTAA. interest 15% and dividend 25%

    Question 2
    Also tax credit for taxes paid to USA do I use my effective tax rate or use the slab which was applied which in my case is 25% for regular income and 15% for LTCG

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