Foreign direct investment (FDI) refers to a company from one country making a physical investment into building a factory in another country. To qualify as FDI, the parent company needs to own at least 10% of voting shares of the foreign affiliate. There are various types of FDI, including joint ventures and setting up branches or project offices abroad. FDI can be attracted through economic growth opportunities, deregulation policies, and operational flexibility offered in a country. Both foreign and domestic companies face various tax implications for foreign collaborations in India.

1. Foreign Direct Investments By Prof. Augustin Amaladas M.Com., AICWA.,PGDFM.,DIM.,B.Ed.

7. 1. Technical collaboration agreements Initial Lump sum With transfer Of rights Royalty for use of patent Fees for tech. Services/managerial Payment for Drawings/ design Payment for Supply of machinery

11. 115A, 115AB, 115AC, 115AD, 115BBA and 115D

12. 1.Revenue expenditure-deduction is allowed. 2. Capital expenditure-depreciation u/s 32 is allowed. 3. Payment to foreign personnel in India-installation of equipment-capitalised-depreciation allowed . 4.Training expenditure-allowed deduction 5.Payment for acquisition of plant and machinery-depreciation allowed 6.Interest-allowed deduction u/s 36(1)(iii) 6. Interest paid to acquire capital asset-capitalised upto the date of put into use/ready to use. 1.Non residents-Income received, deemed to be received and accrued, or deemed to accrue in India-taxable 2.Exempted income U/S 10 of IT Act. 3. Special computation of Income u/s 44DA, 115A, 115AB, 115AC and 115AD 4.Double taxation avoidance agreements. Indian Collaborators Foreign Collaborator