From: jassi@ouchem.chem.oakland.edu (Jaspinder Sachdev(WSU Accounting))
Subject: Re:Taxes for RA/TA
Organization: Oakland University, Rochester MI.
Distribution: usa
Date: Fri, 25 Dec 1992 22:49:51 GMT


In article <92357.125501MITRA@PURCCVM.BITNET> you write:
>Would be grateful if you can clarify some issues regarding Income
>tax payable by Indian Students on assistantship at U.S univs.
>
>1. In discussions with the Student Advisers at USEFI it was made
>   clear that while earlier Indian students at U.S universities
>   paid income- tax, effective from the Oct'90 when a tax treaty
>   was signed by the two countries, the earnings from assistantships'
>   would be exempt from income tax. In fact some students who were
>   then already studying in the U.S also said that their univs. did
>   deduct tax from their pay cheque even after Oct '90 but this was
>   stopped later and the total sum deducted since Oct' 90 was refunded.
>
>2. Here at Purdue we still pay I-tax on assistantship salary at the
>   rate of around 12% of gross pay. This consists of both federal
>   and state taxes.
>
>3. When the Oct'90 tax treaty was brought to the notice of the authorities
>   here they showed us the photocopy of a single page of the tax treaty
>   wherein it is stated that an Indian student on any fellowship or
>   assistantship in a U.S univ will be exempt from I tax on any income
>   earned outside the U.S.
>
>4. Two reasons we doubt that something is wrong
>   - This is totally contrary to the information given at USEFI
>     and also given by some Indian students studying on RA/TA ship here.
>
>   - A single page of a tax treaty does not give the full picture and
>     can sometimes be misleading

       Probably that is the relevant page out of the whole treaty as
applicable to the tax situation in India.

>
>We will be very grateful if you can throw light on the issue. We are
>specially interested if
>
>- Your RA/TA salary is not taxed. What is the reason as stated by
>  the univ. authorities ?
>- If your univ. used to deduct tax even after Oct'90 but later stopped
>  and refunded the money. What made them do so ? ( we are looking for
>  supporting arguments that we can duplicate here )
>- Any idea where I can get hold of this tax treaty
>
>It is possible that some of these issues have already been discussed
>in detail in s.c.i., some of us new here are not fully aware of the finer
>points, however we would be happy to get any info. to resolve the issue
>esp. since some of the old-timers at Purdue are not 100% sure of what
>is going on.
>
>
>Thanks
>
>Shubhashish Mitra


U r right in so far as the conditions for taxes is concerned. The
situation is definitely that of confusion. I have myself been paying taxes
as a TA first and then RA. Well, I have also been giving u lot of tax info
in the past two odd years. I have seen the treaty myself and nowhere does
it talks about the special provision in so many words about TA/ RA. The
treaty mentions the tax provision for the students.Specifically mentions
the visa status as F-1, J-1, M-1. That is ur status. TA/RA is ur job and
not ur primary reason for coming to this country. Time and again I have
maintained a position that if the treaty will be able to give the same
benefits to the Indian students here as are given to the
residents/citizens.Therefore, if ur american friends are paying taxes on
their assistantships (I am very sure that they are; only FICA i.e. Social
security is exempt) then in that case why wud Indian students be exempt,
thereby according a treatment better than that for americans. 

This traety brings us at par with the americans for the purpose of taxes
and does not give us undue privelges. Also the purpose of the treaty is
not to distinguish between the students . Assistantship holders vs
non-assistantship holding students.

It is true that the income generated  from outside the US is tax free for
Indian students.

Once again I will ask that in case of any confusion, talk to the fellow
american friend and try to get info out of him/her. The bottomline is that
if he/she pays, u pay too.

Sometime towards the end of the January I shall begin posting TAx info
once again-fully updated to help all the categories of the students
including the first time tax payers.

Jassi

 
-- 
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*                                                                             *
*                                 JASPINDER S.SACHDEV                         *
*                              Department of Accounting                       *
*                          School of Business Administration                  *
*                               Wayne State University                        *
*                                 Detroit, MI-48202.                          *
*                                                                             * 
*                 The views expressed herein are strictly my own!!!           *
*                                                                             *
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*                                                                             *
*                                 JASPINDER S.SACHDEV                         *
*                              Department of Accounting                       *