project

1. KPMG in India is one of the leading providers of risk, financial & business
advisory, tax & regulatory services, internal audit, and corporate governance. With
a global approach to service delivery, the firm responds to clients' complex
business challenges with a broad range of services across industry sectors and
national boundaries
About KPMG in India
KPMG was established in India in September 1993, and has rapidly built a
significant competitive presence in the country. The firm operates from its offices
in Mumbai, Pune, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Kochi,
Chandigarh and Ahmedabad, and offers its clients a full range of services,
including financial and business advisory, tax and regulatory, and risk advisory
services.
In India, KPMG has a client base of over 2700 companies. The firm's global
approach to service delivery helps provide value-added services to clients. The
firm serves leading information technology companies and has a strong presence in
the financial services sector in India while serving a number of market leaders in
other industry segments.
Our differentiation is derived from a rapid performance-based, industry-tailored
and technology-enabled business advisory services delivered by some of
the leading talented professionals in the country. KPMG professionals are grouped
by industry focus and our clients are able to deal with industry professionals who
speak their language. Our internal information technology and knowledge
management systems enable the delivery of informed and timely business advice to
clients.
The India Leadership Team
Richard Rekhy is the Chief Executive Officer of KPMG in India. He has over 28
years of multi layered, multi sectoral, top-of-the-pyramid post qualification
experience behind him.

2. Richard was appointed as the Deputy Chief Executive Officer and Head of the
Advisory practice in November 2009 and held the position of the Chief Operating
Officer for KPMG in India from June 2006 to November 2009. Richard served as
the Head of the Risk Advisory Services Practice in KPMG in India from April
2004 till June 2006.
Richard has serviced clients across sectors including advertising, oil and gas,
industrial and consumer markets and specifically in the pharmaceuticals,
technology, manufacturing and retail domains. He comes with real time extensive
experience coupled with detailed understanding of corporate governance,
enterprise risk management, internal audit and business processes re- engineering.
Richard has affiliations with leading business enterprises worldwide, is a member
of the Institute of Chartered Accountants of India and an active member of various
Industry associations and trade bodies. He is on the National Council of CII and
chairs their Northern Region Economic Affairs and Taxation Committee. He is a
member of the National Executive Committee of CII for Corporate Governance
and the prestigious American Chambers of Commerce (AMCHAM). He is
currently on the Board of AMCHAM.
Richard was recently appointed as the Chairman of Enactus India, which is an
international non-profit organisation. Richard is also a member of the EMA and
Global Board for KPMG International.
Richard is an articulate and eloquent speaker, contributing at several public
forums while providing thought leadership through articles in leading newspapers
and magazines on diverse topics - corporate governance/risk management,

3. leadership and the economy.
Prior to joining KPMG, Richard was a Partner and held leadership positions
at Ernst & Young, Arthur Andersen and Ratan S. Mama & Co.
History
KPMG was formed in 1987 with the merger of Peat Marwick International (PMI)
and Klynveld Main Goerdeler (KMG) and their individual member firms.
Spanning three centuries, the organization's history can be traced through the
names of its principal founding members - whose initials form the name "KPMG."
 K stands for Klynveld. Piet Klynveld founded the accounting firm Klynveld
Kraayenhof & Co. in Amsterdam in 1917.
 P is for Peat. William Barclay Peat founded the accounting firm William Barclay
Peat & Co. in London in 1870.
 M stands for Marwick. James Marwick founded the accounting firm Marwick,
Mitchell & Co. with Roger Mitchell in New York City in 1897.
 G is for Goerdeler. Dr. Reinhard Goerdeler was for many years chairman of
Deutsche Treuhand-Gesellschaft and later chairman of KPMG. He is credited with
laying much of the groundwork for the KMG merger.
1911 William Barclay Peat & Co. and Marwick Mitchell & Co. joined forces to
form what would later be known as Peat Marwick International (PMI), a
worldwide network of accounting and consulting firms
1979 Klynveld joined forces with Deutsche Treuhand-Gesellschaft and the
international professional services firm McLintock Main Lafrentz to form
Klynveld Main Goerdeler (KMG)
1987 PMI and KMG and their member firms joined forces. Today, all member
firms throughout the world carry the KPMG name exclusively or include it
in their national firm names

4. International Tax
Brief description
As multinationals across the world look to invest or establish themselves in India
and begin to transact more actively, it is important that India’s tax and regulatory
policies are well understood for enhancing growth and success opportunities.
Similarly, the Indian home grown business houses interested in or aiming to go
global or get listed on the overseas bourses need to understand and stride through
an interplay of cross-border taxes and regulations. Navigating the corporate tax and
regulatory framework for carrying on any activity, along with domain industry
knowledge, is now an integral part of doing business in India or overseas.
Since the last few years, the emphasis laid down by the Indian revenue authorities
is towards expansion of the tax base through digitisation and e-governance.
Further, there could be situations of tax uncertainty and litigation which might
result in tax demands. Accordingly, it has become crucial to understand the
potential impact of new developments in the tax and regulatory spheres and
consequently prepare for the challenges.
KPMG’s International Tax and Regulatory Services (ITR) team comprises of
dedicated tax professionals with in-depth technical knowledge and practical
experience, who the client can trust in relation to corporate tax and regulatory
matters. The team provides advise on various tax matters and helps clients manage
the complexities of multiple tax systems and cross-border challenges.
The tax and regulatory framework is fast-changing in India and globally, adding
further complexities to the already complex and uncertain tax environment. The
following recent developments require corporate houses to gear up their existing
business models and operate under a more complex and globally aligned tax
regime:
a. Tax residency test - Place of Effective Management (POEM)
The Indian domestic tax law has been amended to introduce the concept of POEM
while determining the tax residential status of a foreign company in India. Earlier,
the residential status was determined on the basis of whether or not the foreign
company had control and if the management of its affairs was situated wholly in

5. India. Under the new concept, a foreign company is considered to be resident in
India if its POEM, in that year, is in India. This new concept was applicable from 1
April 2015.
b. Income Computation and Disclosure Standards (ICDS)
There is a conflict between the income as per the books of account and the taxable
income as computed under the Income tax Act. Further, the introduction of Ind AS
(IFRS converged standards), which permitted voluntary adoption for Financial
Year (FY) 2015-16, could raise additional conflict areas while computing the
taxable income. To overcome this issue, the Indian Government recently issued 10
ICDS which provide a new framework for computation of taxable income for all
taxpayers, following the mercantile system of accounting in relation to income
taxable under the heads ‘Profits and Gains from Business and Profession’ and
‘Income from other sources’. The new framework is expected to provide
consistency in computation and reporting of taxable income and to further reduce
litigation and disputes on tax issues. The new framework is applicable with effect
from 1 April 2015.
c. General Anti Avoidance Rules (GAAR)
As per India’s income tax law, the GAAR empowers the revenue authorities to
declare transactions/arrangement as an impermissible avoidance arrangement,
thereby determining and levying taxes as may be deemed appropriate, thereon
denying benefits originally claimed (including those under the tax treaty). More
and more countries are adopting GAAR to check aggressive tax planning. In India,
GAAR is scheduled to come into effect from 1 April 2017.
d. Base Erosion and Profit Shifting (BEPS)
The Organisation for Economic Co-operation and Development (OECD) launched
an Action Plan on Base Erosion and Profit Shifting in July 2013. The plan
recognised the importance of a borderless digital economy and proposed to
develop a new set of standards to prevent BEPS and to equip governments with
domestic and international instruments to prevent corporations from paying little or
no taxes. The OECD believes that multinationals are able to reduce their corporate
tax bill by shifting profits to low or no tax jurisdictions. Certain profits may also be
untaxed as a result of the application of existing international tax rules, which the

6. OECD believes have not kept pace with modern business models. One such
example is that of the digital economy which does not require physical presence in
the country where their services are sold; which often means that profits from such
sales are not taxed in that country.
OECD had identified 15 specific actions considered necessary to prevent BEPS
and has finalized its recommendations thereon for combating international tax
avoidance by MNEs. With an objective to expedite and streamline the
implementation of the measures developed to address BEPS and amend bilateral
tax treaties, it is also proposed to develop a multilateral instrument to be executed
between various countries.
Corporate Tax (R&D Tax)
In order to encourage investments in research and development (“R&D”), the
Government of India has provided an impetus by way of various tax incentives.
These incentives are available in respect of revenue and capital expenditures
incurred by entities for carrying out R&D activities in relation to their businesses,
and also in respect of their contributions to various institutions for carrying out
scientific research. KPMG in India provides assistance to its clients in claiming the
R&D tax incentives by providing services starting from the planning phase to
assistance in obtaining the necessary approvals from the regulators, as well as
quantifying the claim amount.
Corporate Tax Advisory
Taxes may be a significant cost for doing business and hence, upfront advice can
help in attaining tax efficiency. Our professionals are guided by a single, strong
underlying philosophy - ’helping our clients attain their business objectives‘. We
endeavour to adopt a ’handholding approach ‘which encompasses various aspects
of tax advisory.
Our key service offerings include:
 Advice on various domestic as well as international tax matters including cross-
border transactions

7.  Advice from a tax perspective in respect of agreements to be entered into by
various parties
 Advice on withholding tax obligations on payments to residents/non-residents
 Tax advisory for positions to be adopted in the tax return
 Advice on permanent establishment exposure and its tax impact
 Analyse and identify differences between the current tax computation and
requirements of Income Computation and Disclosure Standards (ICDS). Assist in
impact assessment of ICDS from a cash flow and disclosures perspective
 Analyse the impact of Place of Effective Management (POEM) rule for
determining tax residential status of a foreign company/overseas group entity in
India having regard to global management structure
 Analyse and advise on the tax treaty eligibility and provisions including Limitation
on Benefits (LOB) provisions etc.
 Analyse the impact of General Anti Avoidance Rules (GAAR) on domestic and
cross-border transactions/structuring
 Review of operations and analyse the impact of Base Erosion and Profit Shifting
(BEPS) measures
 Advise on repatriation strategies
 LLP set up/conversion strategies
 Advise on availing foreign tax credits in India or in overseas jurisdictions
 Review pending litigation and other uncertain tax positions, to comment on
probability of success and prevention of recurrence (FIN 48)
 Carry out diagnostic health check analysis from a tax perspective
 Review of operations and analyse the impact of Base Erosion and Profit Shifting
(BEPS) measures
 Advise on recent developments (e.g. Black Money Act, 2015, etc.)
Corporate Tax and Regulatory Compliance
The focus of tax assessments (audits) is gradually shifting from micro issues (such
as procedural disallowances) to issue-based and concept-based reviews. Our
professionals with their wide ranging experience and in-depth knowledge help in
navigating these challenges.
Our key service offerings are:

8.  Assist in advance tax computations considering newly introduced Income
Computation and Disclosure Standards (ICDS)
 Assistance in filing corporate tax returns
 Assistance in filing withholding tax returns
 Assistance in preparation and filing of submissions and representations before
revenue authorities on various matters including assessment/reassessment
proceedings, penalty proceedings and stay of demand
 Assistance in representation for pending tax refunds and follow-up with the
revenue authorities
 Assistance on other compliance aspects such as tax registration, assistance in
obtaining lower withholding tax certificate, etc.
Foreign Exchange Regulations
The foreign exchange regulations have been liberalised over the years to facilitate
the remittance of funds both in and out of India. The changes have been introduced
on a continuous basis in line with the government policy of economic
liberalisation. Still, in few cases, specific approvals are required from the
regulatory authorities for foreign exchange transactions/remittances.
The foreign exchange regulations in India are governed by the Foreign Exchange
Management Act, 1999 (“FEMA”). The apex foreign exchange regulatory
authority in India is the Reserve Bank of India (“RBI”) which regulates the law
and is responsible for all key approvals.
FEMA is not only applicable to all parts of India but is also applicable to all
branches, offices and set-ups outside India which are owned or controlled by a
person resident in India. It also applies to all branches, offices and set-ups in India
which are controlled or owned by person resident outside India. FEMA regulates
all aspects of foreign exchange and has direct implications on external trade and
payments.
FEMA also impacts foreign nationals who are working in India or outside.

9. In this respect, below are the key services offered to our clients:
 Assistance in setting up a branch office, liaison office and project office of the
foreign company in India and advising on the approaches required in that matter
 Advise on transactions which have a foreign exchange aspect
 Carry out regulatory due diligence
 Carry out compliance health check/regulatory risk analysis of past
compliances/filings from foreign exchange regulations perspective
 Help with representations before regulatory authorities such as the Reserve Bank
of India, Foreign Investment Promotion Board, etc.
 Assistance in representation for the purpose of compounding matters
 Assistance in obtaining approval for external commercial borrowing.
Inbound Investment Structuring
Since 1991, the regulatory environment in terms of foreign investments has been
consistently eased to make it investor-friendly. The liberalisation programme of the
government aims at rapid and substantial growth of the country's economy and a
harmonious integration with the global economy.
Our key service offerings are:
 Advise on an India entry approach and suggestions for obtaining optimal
ownership/jurisdiction for an investment in India
 Advise on the entity structuring for selecting an optimal entry vehicle such as a
branch, subsidiary, LLP, joint venture, to name a few
 Advise on capital structuring in the backdrop of foreign exchange policies keeping
repatriation needs in mind
 Assistance in filing/obtaining necessary regulatory approvals including those from
the Reserve Bank of India, Foreign Investment Promotion Board, Government of
India and other regulatory authorities
 Assistance in finalising/review of shareholders, joint venture and other relevant
business agreements from a tax perspective
 Repatriation strategies
 Target due diligence.
Outbound Investment Structuring

10. The Indian regulations permit outbound investments from India into overseas
companies, branch offices, joint ventures, etc. The Indian home grown business
houses interested in or aiming to set-up shop abroad or getting listed on the
overseas bourses, also need to understand and stride through an interplay of cross-
border taxes and regulatory challenges.
Our key service offerings are:
 Advise on cross-border investment strategies and suggestions for obtaining optimal
ownership/jurisdiction structures for investment into a particular jurisdiction which
includes setting up an international holding company, global sales company, etc.
 Advise and assistance on entity structuring, capital structuring and regulatory
approval processes in the selected jurisdiction
 Assistance in finalizing/review of shareholders, joint venture and other relevant
business agreements from a tax perspective
 Identifying and enhancing tax and fiscal incentives, including obtaining tax rulings
in the selected jurisdiction
 Advise on the tax credit claim in India and tax treaty implications
 Assistance in obtaining approvals from the Reserve Bank of India/regulatory
authorities that may be required in the matter.
Tax Litigation
Given the legal labyrinth that taxpayers often face, a judicious cost-benefit analysis
is imperative in deciding which issues are worthwhile to litigate and which issues
are more viable to concede.
In this respect, below are the key services offered by us to our clients:-
 Assistance in strategising tax litigation
 Explore alternative tax dispute resolution avenues
 Assistance in representations before the CIT(A), Dispute Resolution Panel (DRP)
and Income Tax Appellate Tribunal (ITAT)
 Assistance in preparation of advance ruling application and provide support for
representation before the Authority for Advance Rulings (AAR) for settling a tax
position

11.  Assistance in drafting and presenting applications to the competent authority for
Mutual Agreement Procedure (MAP) under the tax treaties
 Assisting counsels in preparing/ representing appeals/petitions before high courts
and Supreme Court.
Tax returns and compliance
When are tax returns due? That is, what is the tax return due date?
An individual’s tax return must be filed by 31 July immediately following the end
of the tax year on 31 March. There is no provision for extension of the filing date.
What is the tax year end?
The tax year begins on 01 April and ends on 31 March of the immediately
following year. The income earned during a year is taxable in the relevant year.
The year in which income is earned is known as the previous year or tax year or
financial year. From a tax perspective, the 12 month period subsequent to the tax.
What are the compliance requirements for tax returns in India?
An individual is required to obtain a registration with the tax authorities i.e. a
Permanent Account Number (PAN). PAN is a unique ten digit identification
number given by the Indian tax authorities. PAN is required to be quoted on all the
correspondence with the tax authorities.
For Financial Year (“FY”) (may also be termed as tax year) 2014-15, an individual
is required to file a tax return in India only if his/her taxable income exceeds the
maximum limit not chargeable to tax.prescribed limit (INR250,000).
Further, for FY 2014-15, It is mandatory for every person (not being a company or
a person filing return in ITR 7) to e-file the return of income, if total income
exceeds INR 5,00,000 and for every person claiming tax relief under Section 90,
90A or 91 of the Indian Income Tax Act, 1961 (i.e. a person claiming Treaty
benefits).
Further, every individual being a resident and ordinarily resident in India, having
any asset (including financial interest in any entity) located outside India or signing
authority in any account located outside India would be mandatorily required to
furnish a return of income irrespective of the fact whether the resident taxpayer has

12. taxable income or not.
Tax is required to be withheld at source on salaries, professional fees, rent, interest,
dividends, etc. at the time such income is credited to the account of the payee or at
the time of payment, whichever is earlier. In case the amount of tax withheld at
source is short of the actual tax liability, an individual is liable to pay advance/self
assessment tax.
Advance tax is payable by the taxpayer during the tax year if the estimated taxes
(net of taxes withheld at source) exceeds INR 10,000. Advance tax payable is the
tax on estimated income of the tax year, reduced by tax withheld at source. It is
payable in three installments by individuals as follows:
 30 percent is payable by 15 September of the tax year
 60 percent is payable by 15 December of the tax year
 100 percent by 15 March of the tax year.
In case of default in filing of a tax return, interest is levied on the amount of unpaid
tax at the rate of 1 percent for every month or part thereof for the period during
which the default continues and is payable along with the self-assessment tax
before filing of the tax return. In case of default in payment of advance tax, interest
is levied on the shortfall of advance tax and the deferment of advance tax at the
rate of 1 percent for every month or part thereof, during which the default occurs.
Such interest is payable before filing of the tax return.
Further, a resident senior citizen, not having any income from a business or
profession, shall not be liable to pay advance tax (applicable from tax year 2012-13
onwards).
Residence rules
For the purposes of taxation, how is an individual defined as a resident of
India?
An individual is said to be resident in India in any tax year if he/she is:
 present in India in that tax year for a period or periods totaling 182 days or more
or

13.  present in India for at least 60 days or more during the tax year (182 days or
more for a citizen of India/person of Indian origin on a visit to India; 182 days or
more for a citizen of India who leaves India for employment abroad or as
member of a crew of an Indian ship) and 365 days or more during the preceding
four tax years.
An individual who does not satisfy either of the above conditions is a non-resident
(NR). A not ordinarily resident (NOR) is an individual who:
 has been non-resident in India in nine out of the ten tax years preceding that tax
year or
 has during the seven tax years, preceding that tax year, been in India for a total
period of 729 days or less.
Resident and Ordinarily Residents are taxed on worldwide income. However, NR
and NOR are generally taxed only on Indian-sourced income.
Is there, a de minimus number of days rule when it comes to residency start
and end date? For example, a taxpayer can’t come back to the host country
for more than 10 days after their assignment is over and they repatriate.
There is no de minimus number of days rule in respect of residency start/ end date.
However an individual visiting India for the first time would remain NR if his stay
during the tax year does not exceed 181 days.
In case his/her stay exceeds 181 days, he/she would be NOR. He/She is likely to
maintain the NOR status generally for first two to three years of his/her stay in
India.
What if the assignee enters the country before their assignment begins?
In India the residential status is determined based on the individual's total physical
stay in India during the relevant tax year. Accordingly, the days spent in India prior
to start of the assignment are considered for determining the residential status of
the individual in India.
Termination of residence
Are there any tax compliance requirements when leaving India?
Subject to notified exceptions, every person who is not domiciled in India; who
visits India in connection with business, profession, or employment and who

14. derives income from any source in India, is required to, prior to his / her departure,
intimate the tax authorities about his / her departure in Form 30A along with other
relevant documents so to obtain a No Objection Certificate.. The tax authorities
may issue such a certificate once the person submits the said Form (which is an
appropriate undertaking from his employer / payer of income, in respect of
payment of taxes due from such person in India), along with the relevant
documents.. However, there are no special formalities for terminating residence.
Further, every person who is domiciled in India, at the time of his departure from
India, shall furnish Form 30C to the income tax authorities, which shall inter-alia,
include the following :
 his / her PAN;
 purpose of his / her visit outside India;
 the estimated period of his / her stay outside India.
What if the assignee comes back for a trip after residency has terminated?
In India, the residential status is determined each year based on the total physical
stay of the individual in the concerned tax year. This is irrespective of the purpose
of stay of the individual in India. Also, there is no concept of part/split residency in
India.
Communication between immigration and taxation authorities
Do the immigration authorities in India provide information to the local
taxation authorities regarding when a person enters or leaves India?
There is no formal system under which immigration authorities in India provide
information to local taxation authorities. However, recently tax authorities have
started requesting such details from the immigration authorities on a regular basis.
Filing requirements
Will an assignee have a filing requirement in the host country after they leave
the country and repatriate?
An individual is required to file return of income if there is taxable income in India
exceeding the prescribed exemption limit. This is irrespective of the presence of
assignee in India.

15. Further, from FY 2012-13, every individual who is claiming benefits under Tax
Treaty, and every resident and ordinary resident of India having any asset
(including financial interest in any entity) located outside India or signing authority
in any account located outside India would be mandatorily required to furnish a
return of income disclosing details of such assets irrespective of the fact whether
the taxpayer has taxable income or not.
Economic employer approach
Do the taxation authorities in India adopt the economic employer
approach1
to interpreting Article 15 of the OECD treaty? If no, are the
taxation authorities in India considering the adoption of this interpretation of
economic employer in the future?
There are no defined rules in this respect. However, Organization for Economic
Cooperation and Development (OECD) commentary is commonly referred by tax
authorities while interpreting the treaty provisions.
De minimus number of days
Are there a de minimus number of days2
before the local taxation authorities
will apply the economic employer approach? If yes, what is the de minimus
number of days?
There is no de minimus number of days for applying the economic employer
approach.
Types of taxable compensation
What categories are subject to income tax in general situations?
In general, income from employment includes all compensation, in-cash or in-kind,
which is due to or received by an employee in a tax year. Taxable compensation
includes the following:
 salary, wages, bonuses, allowances, and other cash compensation for services
rendered in India;
 income tax paid by the employer on behalf of the employee;
 specified perquisites.
Tax-exempt income

16. Are there any areas of income that are exempt from taxation in India? If so,
please provide a general definition of these areas.
Generally, subject to certain conditions, the following items of compensation are
not taxable:
 certain travel/tour allowances
 reimbursement of medical expenses up to specified limits
 medical expenses of an employee or any member of his/her family incurred
outside India
 leave travel concession
 allowance granted to meet payment of rent towards accommodation
 tax borne by the employer on non-monetary perquisites
 reimbursement of telephone expenses.
Certain travel/tour allowances
Allowances granted to meet the cost of travel on tour or on transfer, including
sums paid in connection with the transfer, packing, and transportation of personal
effects on such transfer, are exempt to the extent to which such expenses are
actually incurred.
Reimbursement of medical expenses
Reimbursement of medical expenses actually incurred by the employee for
himself/herself or any member of his/her family is exempt up to INR 15,000 per
tax year. However, any reimbursement of costs of hospitalization in a recognized
hospital in India is fully exempt. Employers’ contributions to health insurance
plans abroad would be taxable in India only to the extent the employee has an
interest in the plan vested in him/her during the tax year.
Medical expenses of an employee or any member of his/her family incurred
outside India
Medical expenses of an employee or any member of his/her family incurred
outside India is exempt to the extent permitted by Reserve Bank of India. The cost
of a stay abroad of the employee or a family member and one attendant is also
exempt to the extent permitted by the Reserve Bank of India.

17. Leave travel concession
Leave travel concession granted to the employee for himself/herself and his/her
family for proceeding on leave to any place in India is exempt with respect to two
journeys performed in a block of four calendar years, subject to fulfillment of
certain conditions. The current block is 2014-2017.
Allowances for payment of rent towards accommodation
Allowance granted to meet payment of rent in respect of residential
accommodation occupied by the employee is exempt, subject to certain limits.
Tax borne by the employer on non-monetary perquisites
Tax borne by the employer on non-monetary perquisites provided to the employee
is exempt from tax provided the employer does not claim it as a deduction against
its taxable income.
Telephone expenses
Telephone (including the mobile phone) expenses, paid by the employer on behalf
of the employee or reimbursed by the employer based on actual expenses of the
employees, is exempt from taxation.
Expatriate concessions
Are there any concessions made for expatriates in India?
Certain exemptions are available to foreign nationals and/or non-residents, subject
to fulfillment of prescribed conditions. The exemptions available include the
following:
 Remuneration for services rendered by a foreign national, employed by a foreign
enterprise during his/her stay in India, is exempt if:
o the total period of the stay in India does not exceed 90 days in a tax year;
o the foreign enterprise is not engaged in any trade or business in India; and
o the remuneration is not cross charged to an entity subject to Indian income
tax.
 Remuneration received by or due to a non-resident foreign national for services
rendered in connection with employment on a foreign ship, where the total

18. period of the stay in India does not exceed an aggregate period of 90 days in a
tax year, is exempt from tax.
 Remuneration received by a foreign national working as an employee of a
foreign government is exempt from tax, if the remuneration is received in
connection with training activity in an undertaking, office, or company owned
by the government.
 Remuneration from any cooperative technical assistance program in accordance
with an agreement entered into by the central government with a foreign
government is exempt from tax, provided:
o the remuneration is received from the foreign government
o the employee is required to pay income tax to another foreign government on
income arising outside India.
Salary earned from working abroad
Is salary earned from working abroad taxed in India? If so, how?
Compensation received outside India for work performed by an employee abroad,
which is not in connection with the services being rendered in India, is not taxable
in India, unless the same is received in India, where the employee is NR or NOR in
India.
If the expatriate qualifies as a resident and ordinarily resident of India, the salary
earned for working abroad will be taxable in India even if the same is received
outside India and the same may be subject to Treat benefits or benefits under the
domestic tax laws of India.
Taxation of investment income and capital gains
Are investment income and capital gains taxed in India? If so, how?
Income from the transfer of a capital asset situated in India is deemed to accrue in
India. Hence, all individuals are liable for tax on capital gains arising from the
transfer of capital assets in India. Securities Transaction Tax (STT) is leviable on
transactions of equity shares in a company, units of an equity oriented Mutual
Fund and derivatives which are routed through any recognized stock exchange in
India.

19. Short-term capital gains (i.e., capital gains on shares or any other security listed on
a recognized stock exchange in India or on units of specified mutual funds held for
not more than one year, and in case of other assets held for not more than three
years) are taxed in the same manner as ordinary income. Short-term capital gains
arising on transfer of securities liable to STT are taxed at a rate of 15 percent (plus
surcharge, if any plus education cess).
Long-term capital gains arising on transfer of Equity shares or units of Equity
Oriented Mutual Funds liable to STT are exempt from tax.
Please note that till 10 July 2014, if units of debt oriented mutual funds or unlisted
shares are held for more than 12 months then gain arising on the same was treated
as Long term capital gains (< 12 months – Short Term).
From 10 July 2014 onwards, if units of debt oriented mutual funds or unlisted
shares are held for more than 36 months then gain arising on the same shall be
Long term capital gains (< 36 months – Short Term).
Long-term capital gains from transfer of other assets are taxed at a concessional
rate of 20 percent plus surcharge, if any plus education cess. In determining such
long-term capital gains, the cost of assets is indexed upwards for inflation as per
the notified index table.
There are exemption provisions in respect of long term capital gains on re-
investment in specified assets/ securities.
Securities transaction tax leviable varies from 0.017 percent to 0.25 percent of the
transaction value, depending on the type of securities transacted.