I have one full time job in India and I have one full time job in Japan As well. What is the tax implication for me in Japan and India. How much tax i need to pay and which country?
When you have employment income from two countries, the tax implications can be complex and depend on several factors, including your residency status in each country, the existence of a tax treaty between the countries, and specific local tax laws. Here’s a general overview of how it might work for someone with full-time jobs in both India and Japan:
Tax Residency and Its Impact
- Japan: Japan taxes individuals based on their residency status. If you are considered a resident for tax purposes (usually meaning you live in Japan for more than 183 days in a year), you are taxed on your worldwide income. Non-residents are only taxed on their income from Japanese sources.
- India: Similarly, India taxes individuals based on their residency. If you are a resident of India (reside in India for 182 days or more in a financial year, or 365 days spread out over four preceding years), you are taxed on your worldwide income. Non-residents are taxed only on the income earned within India.
Double Taxation
Since you have income from both Japan and India, double taxation could occur, meaning the same income is taxed by both countries. To prevent this, Japan and India have a Double Taxation Avoidance Agreement (DTAA). You can usually claim a tax credit in one country for the taxes paid in another, but the specific rules depend on the treaty and the local laws.
How to Handle Taxes:
- Declare All Income: You need to declare your income from both countries in your tax returns if you are considered a resident for tax purposes in that country.
- Utilize Tax Credits: Under the DTAA, you may claim tax relief in the form of a credit for the taxes paid in the other country. This generally requires proving the tax paid in one country to the tax authorities of the other.
- Professional Advice: Given the complexities, especially with tax treaties and differing residency rules, it’s highly advisable to consult with tax professionals in both countries. They can provide guidance tailored to your specific situation, help with filing tax returns correctly, and ensure you utilize all available tax benefits and credits.
Typical Tax Filing Process
- In Japan: File an annual tax return with the National Tax Agency, including all global income if you’re a resident. Non-residents file only for their Japanese-source income.
- In India: File an annual tax return with the Income Tax Department, including all global income if you’re a resident. Non-residents report only their Indian income.