My company paid Monthly Short Term International Allowance & deducted TDS

Hey, Great discussion and thanks for the info … My Query if you can help …I was on 5 month Short term assignment outside India. My Company

  1. Paid me a Monthly Short Term International Allowance and deducted TDS on the same and paid the remaining allowance post tax in INR in my Indian salary account

  2. Although the amount was mentioned as Short Term International Allowance in my pay slip , in Form 16 it is added to my salary. Since I have already paid tax on the allowance (TDS) can I try getting a refund of the TDS deducted on the allowance

  3. What is the implication, if I file for a refund and taxman holds it as not allowed. Will I be fined, even though I have paid tax upfront already

  4. I do not have documents to show where I have spent the money, only have slips showing conversions of my INR allowance to Dollars to be eventually withdrawn and spent there. I have no savings from the allowance

Please help urgently since I have already filed my return and am looking to modify it , if you think this is not legal/ has a significant risk of being fined if interpreted differently by the taxman

PS: Would post my experience either ways, once I am done with my assessment

Hi Pankaj,
Here are the answers to the best of my knowledge:

  1. If they paid you allowance in INR and that too in India, it is taxable.
  2. I have a strong feeling that your company treated the allowance as salary expense (from the point of view of company) and not as per diem allowance. If they had counted it as per diem allowance, it would not be taxable in your hands. But, looks like this is not the case.
  3. There is no fine as you do not have any pending tax to be paid.
  4. If your company has not treated it as per diem in their accounts, you have no option to treat it as non-taxable for you. It was paid as salary to you in India and hence you are liable to pay taxes on it.

Let me know if you need more information.