The remittance of funds abroad from perspective of Income Tax Act, 1961 (“IT Act”) requires a clear understanding of its process flow (right from the applicability of the Act to the procedure in which the funds will be remitted outside India). By way of this presentation, we have tried to simplify the Income Tax provisions for remittance of funds abroad for our readers.
This document provides information on TDS requirements for foreign remittances under Indian law. It notes that TDS must be deducted on payments to non-residents according to section 195 of the Income Tax Act. Form 15CA must be filed for remittances over Rs. 50,000 or Rs. 2.5 lakhs annually along with Form 15CB from a chartered accountant. The proper procedure for deducting and depositing TDS is outlined. Implications of sections 195, 206AA, and tax treaties are discussed. The importance of obtaining a tax residency certificate for claiming treaty benefits is also explained.
This document discusses various aspects of section 195 of the Indian Income Tax Act, which deals with tax deducted at source (TDS) for payments made to non-residents. Some key points discussed include:
- Section 195 mandates any person making payments such as interest, royalty or fees for technical services to non-residents to deduct TDS at the time of payment.
- The rate of TDS depends on factors such as whether a lower treaty rate can be applied based on a tax residency certificate.
- Non-compliance can attract penalties for the payer such as interest, fines and in some cases prosecution.
- Exceptions apply when a lower or nil withholding certificate is obtained
This document provides an overview of the tax deducted at source (TDS) provisions under the Goods and Services Tax (GST) law in India. It discusses who is liable to deduct TDS, the registration requirements, rates and thresholds for TDS, payment and return filing procedures, certificates to be issued, refunds, and comparisons with the previous TDS system under state VAT laws. The key aspects covered are registration under GST for TDS, the 1-2% rates for deduction, monthly payment and return filing timelines, and certificates to be provided to deductees.
The document summarizes key aspects of registration under the Goods and Services Tax (GST) law in India. It outlines who is required to register based on turnover thresholds, the timeline for registration, the registration process which involves filing an application and receiving a GST Identification Number (GSTIN), and circumstances under which a registration can be amended or cancelled. It also discusses the structure of the 15-digit GSTIN and specifies that a single registration will be granted per state instead of separate registrations as in some previous indirect tax laws.
GST Provisions relating to Export, import, sez etcCA Mukesh Sharma
The document discusses key aspects of export and import of goods and services under GST. It explains that export of goods is treated as zero-rated supply and does not require fulfillment of additional conditions like export of services. Import of goods into India would be treated as an inter-state supply and subject to integrated tax. The document also discusses important points regarding imports including time and place of levy of tax, availability of input tax credit, and valuation for tax purposes. High sea sales occurring before goods cross Indian customs frontiers are treated as inter-state supplies subject to integrated tax.
Under Fundamental Concepts of Income Tax Presentation, Important Definitions under Income Tax Act, Residential Status of the assesses & its tax incidence is covered.
This document provides an overview of input tax credit (ITC) under the Goods and Services Tax (GST) regime in India. It defines key terms related to ITC such as input, capital goods, input tax, output tax, and reverse charge. It outlines the conditions for claiming ITC and lists items for which ITC is ineligible. It also discusses proportionate credit, adjustments to ITC, transition provisions for claiming ITC on stock, and the process for claiming ITC on inter-state and intra-state supplies.
Reverse charge is a mechanism where the liability to pay tax is on the recipient of the goods or services instead of the supplier. The document summarizes the categories of goods and services where reverse charge applies as per the CGST and IGST Acts, including transportation services by GTA, legal services by advocates, sponsorship services, services provided by directors and insurance agents. Rate of tax is also specified for different categories ranging from nil to 18%.
This document provides information on TDS requirements for foreign remittances under Indian law. It notes that TDS must be deducted on payments to non-residents according to section 195 of the Income Tax Act. Form 15CA must be filed for remittances over Rs. 50,000 or Rs. 2.5 lakhs annually along with Form 15CB from a chartered accountant. The proper procedure for deducting and depositing TDS is outlined. Implications of sections 195, 206AA, and tax treaties are discussed. The importance of obtaining a tax residency certificate for claiming treaty benefits is also explained.
This document discusses various aspects of section 195 of the Indian Income Tax Act, which deals with tax deducted at source (TDS) for payments made to non-residents. Some key points discussed include:
- Section 195 mandates any person making payments such as interest, royalty or fees for technical services to non-residents to deduct TDS at the time of payment.
- The rate of TDS depends on factors such as whether a lower treaty rate can be applied based on a tax residency certificate.
- Non-compliance can attract penalties for the payer such as interest, fines and in some cases prosecution.
- Exceptions apply when a lower or nil withholding certificate is obtained
This document provides an overview of the tax deducted at source (TDS) provisions under the Goods and Services Tax (GST) law in India. It discusses who is liable to deduct TDS, the registration requirements, rates and thresholds for TDS, payment and return filing procedures, certificates to be issued, refunds, and comparisons with the previous TDS system under state VAT laws. The key aspects covered are registration under GST for TDS, the 1-2% rates for deduction, monthly payment and return filing timelines, and certificates to be provided to deductees.
The document summarizes key aspects of registration under the Goods and Services Tax (GST) law in India. It outlines who is required to register based on turnover thresholds, the timeline for registration, the registration process which involves filing an application and receiving a GST Identification Number (GSTIN), and circumstances under which a registration can be amended or cancelled. It also discusses the structure of the 15-digit GSTIN and specifies that a single registration will be granted per state instead of separate registrations as in some previous indirect tax laws.
GST Provisions relating to Export, import, sez etcCA Mukesh Sharma
The document discusses key aspects of export and import of goods and services under GST. It explains that export of goods is treated as zero-rated supply and does not require fulfillment of additional conditions like export of services. Import of goods into India would be treated as an inter-state supply and subject to integrated tax. The document also discusses important points regarding imports including time and place of levy of tax, availability of input tax credit, and valuation for tax purposes. High sea sales occurring before goods cross Indian customs frontiers are treated as inter-state supplies subject to integrated tax.
Under Fundamental Concepts of Income Tax Presentation, Important Definitions under Income Tax Act, Residential Status of the assesses & its tax incidence is covered.
This document provides an overview of input tax credit (ITC) under the Goods and Services Tax (GST) regime in India. It defines key terms related to ITC such as input, capital goods, input tax, output tax, and reverse charge. It outlines the conditions for claiming ITC and lists items for which ITC is ineligible. It also discusses proportionate credit, adjustments to ITC, transition provisions for claiming ITC on stock, and the process for claiming ITC on inter-state and intra-state supplies.
Reverse charge is a mechanism where the liability to pay tax is on the recipient of the goods or services instead of the supplier. The document summarizes the categories of goods and services where reverse charge applies as per the CGST and IGST Acts, including transportation services by GTA, legal services by advocates, sponsorship services, services provided by directors and insurance agents. Rate of tax is also specified for different categories ranging from nil to 18%.
OBJECTIVE
Goods and Services Tax (GST) is an Indirect Tax levied in India introduced in July, 2017 which was one of the most important reforms in the Indian Economy. Unlike erstwhile indirect tax regime, GST promises seamless credit on goods and services across the entire supply chain with some exceptions. In this webinar, we shall understand and analyse the provisions related to Input Tax Credit under the GST law
- The document provides an overview of the proposed Goods and Services Tax (GST) model for India.
- It outlines the shortcomings of the current indirect tax system that GST aims to address, such as multiplicity of taxes and compliance burdens.
- The key aspects of GST that are discussed include the dual GST model with Central and State taxes, taxable events and registration requirements, return filing process, time and place of supply rules, payment mechanisms, and other provisions like input tax credit and refunds.
El documento describe el Impuesto al Valor Agregado (IVA) en Venezuela, incluyendo que es un porcentaje adicional agregado al precio final, se rige por la Ley de IVA y sus reglamentos, y los contribuyentes deben llevar contabilidad de sus operaciones gravadas y declarar y pagar el impuesto correspondiente.
The document discusses place of supply under the Goods and Services Tax (GST) in India. It states that place of supply is an important factor under GST as it determines whether a supply is intra-state or inter-state, and consequently whether CGST + SGST or IGST is applicable. It then provides details on how to determine the place of supply for inter-state and intra-state supplies of goods and services based on the location of the supplier and recipient. Specific rules are outlined for determining place of supply for various scenarios involving movement of goods, immovable property, transportation, events and other services.
En esta primera parte se aborda la Ley 10/2010 sobre Prevención del Blanqueo de Capitales. Se aborda tanto la normativa penal nacional como internacional. Se dan a conocer las recomendaciones de organismos internacionales persiguen el blanqueo de capitales y la financiación del terrorismo, como el GAFI y el Grupo Egmont, por citar algunos. Se explica qué es el SEPBLAC, la ONIF, OLAF, etc. y además qué es lo que hacen o las funciones que desarrollan.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
The document discusses the requirements and procedures for filing Form 15CA and Form 15CB for making payments to non-residents in India.
Form 15CA is a declaration that must be filed by the remitter along with a certificate from a chartered accountant in Form 15CB when making remittances exceeding Rs. 50,000 or an aggregate of over Rs. 2,50,000 in a year. Form 15CA captures details of the remitter, recipient and remittance amount, while Form 15CB contains the chartered accountant's determination of taxability.
Specific information to be provided in each form is outlined, including the remitter and recipient's identification details, bank transfer information
BATAS WAKTU PEMBAYARAN, PENYETORAN, DAN PELAPORAN PAJAKRiki Ardoni
Dokumen tersebut membahas batas waktu pelaporan dan pembayaran SPT Tahunan dan Masa untuk berbagai jenis pajak sesuai peraturan perpajakan. Termasuk batas waktu SPT Tahunan PPh untuk Wajib Pajak Orang Pribadi dan Badan, serta batas waktu SPT Masa untuk berbagai jenis pajak seperti PPh Pasal 21, PPN, dan lainnya yang berkisar antara 10-20 hari setelah akhir
This document provides an overview of key transition provisions under the GST Act relating to claiming input tax credit for taxes paid under previous indirect tax regimes. It explains that transition provisions allow earlier taxpayers to migrate to GST with ease by carrying forward eligible input tax credits. It outlines conditions for claiming credits for cenvat, VAT, entry tax and capital goods, as well as for persons who were previously unregistered or exempt suppliers. It also summarizes the process for filing GST TRAN-1 and TRAN-2 forms.
Central Sales Tax (CST) is a tax levied by the Central Government of India on the inter-state sale of goods. It applies only to sales that involve the movement of goods between states and not on intra-state sales. Under the CST Act, any dealer involved in inter-state trade must register and pay tax. The Act provides a framework for determining whether a sale constitutes inter-state trade and for the levy, collection, and distribution of CST.
The following Presentation enumerates the various provisions w.r.t. ITC, how it can be used,eligibilty and conditions for claiming ITC along with various case studies and illustrations. further, it elaborates the concept of input service distributor.
This document provides an overview of key aspects of the Goods and Services Tax (GST) in India, including:
- What GST is and the taxes it subsumes
- Registration requirements and thresholds
- Concepts of supply, composite/mixed supplies, and schedules
- Taxable events and the charging section
- Rates including nil and zero rated supplies
- Timelines for GST returns
The document covers the major components of the GST framework in India in a comprehensive manner across multiple pages.
In the day to day operations of the business, it is essential to have grip on Tax Deducted at Source (TDS) which acts as a means to collect tax at the inception of the income itself and Tax Collected at Source (TCS) where a seller collects a certain amount of tax from the buyer at the time of sale. In this webinar we will be learning the applicability, non-applicability, prevailing rate of tax and other related provisions of the Income-tax Act with respect to TDS and TCS
The Goods and Services Tax was implemented in July 2017 in an effort to subsume multiple indirect taxes. The new tax regime has been adopted quite well by businesses across the country since its implementation. The Goods and Services Act will also have a great impact on the tax system in India by reducing the unfavorable effect of tax on the cost of goods and services. It is expected that the creation of the Goods and Services Tax Act and its implementation will have a great impact on various aspects of business in India by changing the traditional pattern of pricing the products and services.
Supply under GST (goods and services tax)Aashi90100
This document provides definitions and explanations of key terms under the Goods and Services Tax (GST) in India such as goods, services, taxable person, supplier, recipient, location of supply, and place of business. It explains concepts like input service distributor, usual place of residence, principal place of business, and fixed establishment. The document aims to outline the scope and coverage of entities, transactions, and locations that would be subject to GST in India.
Dokumen ini membahas tentang perbedaan akuntansi pelaporan keuangan dan perpajakan dalam penentuan laba kena pajak dan hutang/kewajiban pajak. Juga dibahas tentang pengakuan pajak tangguhan asset dan liabilitas yang timbul dari perbedaan waktu antara pelaporan keuangan dan perpajakan.
Kup standar-setelah-uu-no-28 2007-edisi-1Thin DunXpiet
Undang-undang ini mengatur tentang ketentuan umum dan tata cara perpajakan di Indonesia. Terdapat definisi pajak, kewajiban mendaftar sebagai Wajib Pajak dan Pengusaha Kena Pajak, serta penjelasan mengenai Nomor Pokok Wajib Pajak dan pengukuhan sebagai Pengusaha Kena Pajak.
Group 6 Presentationsdaaaaaaaaaaaaaaaaaaaaaaaaaaaaoscarswann
This document discusses international tax law regarding the treatment of dividends, interest, and hybrid financial instruments. It begins with general definitions of dividends and interest from both treaty and domestic law perspectives. It notes differences that can lead to double taxation. Methods for avoiding double taxation like the credit and exemption methods are described. The concept of double non-taxation is introduced along with how hybrid instruments like Brazil's Juros sobre o Capital Próprio can potentially cause it. Two cases addressing whether JCP income is taxed as dividends or interest under the Spain-Brazil tax treaty are summarized.
OBJECTIVE
Goods and Services Tax (GST) is an Indirect Tax levied in India introduced in July, 2017 which was one of the most important reforms in the Indian Economy. Unlike erstwhile indirect tax regime, GST promises seamless credit on goods and services across the entire supply chain with some exceptions. In this webinar, we shall understand and analyse the provisions related to Input Tax Credit under the GST law
- The document provides an overview of the proposed Goods and Services Tax (GST) model for India.
- It outlines the shortcomings of the current indirect tax system that GST aims to address, such as multiplicity of taxes and compliance burdens.
- The key aspects of GST that are discussed include the dual GST model with Central and State taxes, taxable events and registration requirements, return filing process, time and place of supply rules, payment mechanisms, and other provisions like input tax credit and refunds.
El documento describe el Impuesto al Valor Agregado (IVA) en Venezuela, incluyendo que es un porcentaje adicional agregado al precio final, se rige por la Ley de IVA y sus reglamentos, y los contribuyentes deben llevar contabilidad de sus operaciones gravadas y declarar y pagar el impuesto correspondiente.
The document discusses place of supply under the Goods and Services Tax (GST) in India. It states that place of supply is an important factor under GST as it determines whether a supply is intra-state or inter-state, and consequently whether CGST + SGST or IGST is applicable. It then provides details on how to determine the place of supply for inter-state and intra-state supplies of goods and services based on the location of the supplier and recipient. Specific rules are outlined for determining place of supply for various scenarios involving movement of goods, immovable property, transportation, events and other services.
En esta primera parte se aborda la Ley 10/2010 sobre Prevención del Blanqueo de Capitales. Se aborda tanto la normativa penal nacional como internacional. Se dan a conocer las recomendaciones de organismos internacionales persiguen el blanqueo de capitales y la financiación del terrorismo, como el GAFI y el Grupo Egmont, por citar algunos. Se explica qué es el SEPBLAC, la ONIF, OLAF, etc. y además qué es lo que hacen o las funciones que desarrollan.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
The document discusses the requirements and procedures for filing Form 15CA and Form 15CB for making payments to non-residents in India.
Form 15CA is a declaration that must be filed by the remitter along with a certificate from a chartered accountant in Form 15CB when making remittances exceeding Rs. 50,000 or an aggregate of over Rs. 2,50,000 in a year. Form 15CA captures details of the remitter, recipient and remittance amount, while Form 15CB contains the chartered accountant's determination of taxability.
Specific information to be provided in each form is outlined, including the remitter and recipient's identification details, bank transfer information
BATAS WAKTU PEMBAYARAN, PENYETORAN, DAN PELAPORAN PAJAKRiki Ardoni
Dokumen tersebut membahas batas waktu pelaporan dan pembayaran SPT Tahunan dan Masa untuk berbagai jenis pajak sesuai peraturan perpajakan. Termasuk batas waktu SPT Tahunan PPh untuk Wajib Pajak Orang Pribadi dan Badan, serta batas waktu SPT Masa untuk berbagai jenis pajak seperti PPh Pasal 21, PPN, dan lainnya yang berkisar antara 10-20 hari setelah akhir
This document provides an overview of key transition provisions under the GST Act relating to claiming input tax credit for taxes paid under previous indirect tax regimes. It explains that transition provisions allow earlier taxpayers to migrate to GST with ease by carrying forward eligible input tax credits. It outlines conditions for claiming credits for cenvat, VAT, entry tax and capital goods, as well as for persons who were previously unregistered or exempt suppliers. It also summarizes the process for filing GST TRAN-1 and TRAN-2 forms.
Central Sales Tax (CST) is a tax levied by the Central Government of India on the inter-state sale of goods. It applies only to sales that involve the movement of goods between states and not on intra-state sales. Under the CST Act, any dealer involved in inter-state trade must register and pay tax. The Act provides a framework for determining whether a sale constitutes inter-state trade and for the levy, collection, and distribution of CST.
The following Presentation enumerates the various provisions w.r.t. ITC, how it can be used,eligibilty and conditions for claiming ITC along with various case studies and illustrations. further, it elaborates the concept of input service distributor.
This document provides an overview of key aspects of the Goods and Services Tax (GST) in India, including:
- What GST is and the taxes it subsumes
- Registration requirements and thresholds
- Concepts of supply, composite/mixed supplies, and schedules
- Taxable events and the charging section
- Rates including nil and zero rated supplies
- Timelines for GST returns
The document covers the major components of the GST framework in India in a comprehensive manner across multiple pages.
In the day to day operations of the business, it is essential to have grip on Tax Deducted at Source (TDS) which acts as a means to collect tax at the inception of the income itself and Tax Collected at Source (TCS) where a seller collects a certain amount of tax from the buyer at the time of sale. In this webinar we will be learning the applicability, non-applicability, prevailing rate of tax and other related provisions of the Income-tax Act with respect to TDS and TCS
The Goods and Services Tax was implemented in July 2017 in an effort to subsume multiple indirect taxes. The new tax regime has been adopted quite well by businesses across the country since its implementation. The Goods and Services Act will also have a great impact on the tax system in India by reducing the unfavorable effect of tax on the cost of goods and services. It is expected that the creation of the Goods and Services Tax Act and its implementation will have a great impact on various aspects of business in India by changing the traditional pattern of pricing the products and services.
Supply under GST (goods and services tax)Aashi90100
This document provides definitions and explanations of key terms under the Goods and Services Tax (GST) in India such as goods, services, taxable person, supplier, recipient, location of supply, and place of business. It explains concepts like input service distributor, usual place of residence, principal place of business, and fixed establishment. The document aims to outline the scope and coverage of entities, transactions, and locations that would be subject to GST in India.
Dokumen ini membahas tentang perbedaan akuntansi pelaporan keuangan dan perpajakan dalam penentuan laba kena pajak dan hutang/kewajiban pajak. Juga dibahas tentang pengakuan pajak tangguhan asset dan liabilitas yang timbul dari perbedaan waktu antara pelaporan keuangan dan perpajakan.
Kup standar-setelah-uu-no-28 2007-edisi-1Thin DunXpiet
Undang-undang ini mengatur tentang ketentuan umum dan tata cara perpajakan di Indonesia. Terdapat definisi pajak, kewajiban mendaftar sebagai Wajib Pajak dan Pengusaha Kena Pajak, serta penjelasan mengenai Nomor Pokok Wajib Pajak dan pengukuhan sebagai Pengusaha Kena Pajak.
Group 6 Presentationsdaaaaaaaaaaaaaaaaaaaaaaaaaaaaoscarswann
This document discusses international tax law regarding the treatment of dividends, interest, and hybrid financial instruments. It begins with general definitions of dividends and interest from both treaty and domestic law perspectives. It notes differences that can lead to double taxation. Methods for avoiding double taxation like the credit and exemption methods are described. The concept of double non-taxation is introduced along with how hybrid instruments like Brazil's Juros sobre o Capital Próprio can potentially cause it. Two cases addressing whether JCP income is taxed as dividends or interest under the Spain-Brazil tax treaty are summarized.
This document discusses provisions related to non-residents under the Indian Income Tax Act, including the impact of Section 206AA on payments to non-residents and the implications of 'net of tax' arrangements. It addresses issues such as whether Section 206AA overrides tax treaty provisions, the interplay between Sections 195A and 206AA, and considerations regarding tax deductions on reimbursements and payments routed through pass-through entities. The document provides analysis of key cases and sections of the Income Tax Act to clarify uncertainties and compliance obligations for payments to non-residents.
Form 10F will now be required to be filed through the e-filing account of the non-resident taxpayer on the Income Tax portal. Know the How and details to file Form 10F online
The Easiest way to understand International taxation , Concept of Double taxation and its avoidance agreements (DTAA) and its types . Tax implication of activities of foreign enterprise in India: Mode of entry and taxation respectively.
The document provides information on recent tax law developments in Indonesia, including:
1) The government is proposing an omnibus law to reform the tax system to boost investment and economic growth. Key reforms include gradually lowering the corporate tax rate and eliminating dividend tax.
2) Current rules impose a maximum debt-to-equity ratio of 4:1 for tax purposes. Interest expenses above this ratio are not tax deductible.
3) KIB Consulting, a tax advisory firm, summarizes these tax law changes and notes its involvement in discussions with government on investment issues and the omnibus law.
The document provides information on recent tax law developments in Indonesia, including:
1) New debt-to-equity ratio rules that limit interest deductibility for corporate taxpayers to a 4:1 ratio.
2) Proposed omnibus law that aims to simplify business regulations, reduce corporate income tax rates, exempt some dividends, and tax the digital economy.
3) KIB Consulting's involvement in tax discussions with the Indonesian tax authority and business groups on investment issues and solutions.
This is a presentation covering various sections of the Income Tax Act 1961, pertaining to Non - Residents. The presentation offers varying degree of coverage for the sections covered, and was presented before the Ghatkopar Study Circle of The Institute of Chartered Accountants of India - WIRC.
This document discusses concepts related to tax planning and management. It begins by defining tax and outlining the stages of tax imposition. It then distinguishes between tax planning, tax evasion, and tax avoidance. Tax planning involves legally arranging one's finances to minimize tax burden while still meeting social and economic goals. Tax evasion is illegal and involves suppressing income or inflating expenses to reduce taxes owed. Tax avoidance uses loopholes to technically satisfy the law but not the intent. The document concludes by discussing tax management, which involves complying with tax laws and procedures like deducting, collecting, and paying taxes owed.
Impact of taxation on cross border investment Isha Joshi
Consequent to the implemented economic liberalisation in India during the 1990s, substantial international investment activity began within the Indian capital markets and through corporate vehicles with an increasingly vibrant fervour. In fact, today, Foreign Institutional Investors (FIIs) play a crucial role in the liquidity, growth and vitality seen in Indian capital markets. Simultaneously, along with increasing FII activity, as a result of the favourable economic and political climate, India also witnessed an increasing quantum of Foreign Domestic Investment (FDI).
The regulation of these investment channels and instruments was at the front and centre of economic policy debate, a part of which revolves around taxation. There is undoubtedly a proximate and intelligible nexus between taxation and the employment of these investment tools. A taxation regime that is favourable can work in effectively attracting more international investment which in turn would enhance market liquidity, activity, and growth.1 While FIIs and FDIs may appear to be similar investment channels, for the most part, they serve entirely different objectives, and operate in substantially different manners and are subject to different regulatory regimes in terms of exchange, economic and taxation policy.
In the coming sections of this paper, the authors have attempted to analyse several aspects of FII and FDI taxation in India. The first section delineates the differences in FIIs and FDIs, their market strategy, modus operandi, and objectives, while ascertaining what exactly these investment channels imply and the various investment vehicles that may be employed by foreign actors.
The subsequent section of the paper outlines the tax regime applicable to such FDIs and FIIs, depending on the organisational scheme and objective of the business vehicle so employed for the investment.
Given that FIIs and FDIs essentially involve a foreign element, the question of double taxation is one which necessarily requires to be addressed. To that end, in the third section of this paper, the authors have looked at Double Taxation Avoidance Agreements (DTAAs) (Tax Treaties) in the context of FIIs and FDIs.
The document discusses the provisions for tax deducted at source (TDS) for non-salary income in India, including the types of non-salary payments that are subject to TDS, exemptions, procedures for depositing deducted taxes, and credits for taxes deducted at source. Key areas covered include interest, dividends, rent, professional fees, lottery winnings, and payments to contractors where TDS applies at prescribed rates.
Detailed discussion on introduction of Equalisation Levy in India, relevant considerations, EQ Levy 2.0 (on NR E-commerce operator), some unresolved issues, interplay between EQ Levy 2.0 and TDS on e-commerce business u/s 194-O has been captured here making it a comprehensive deck for e-commerce players.
Double taxation occurs when the same income is taxed by both the country where it originates (source country) and the country of the taxpayer's residence (residence country). To reduce barriers to international trade, countries often negotiate double taxation avoidance agreements (DTAAs) which allocate taxing rights between the two countries. India has entered into over 60 such agreements. DTAAs aim to eliminate double taxation through methods like exemption (one country does not tax) or tax credit (residence country provides credit for taxes paid in source country). They define terms like permanent establishment that determine when business income can be taxed in the source country. DTAAs and limitations of benefits clauses help prevent treaty shopping where third parties get benefits not
This document provides an overview of taxes, specifically income tax. It discusses direct and indirect taxes, how income tax is collected internationally, and key concepts in double taxation treaties. Direct taxes are paid by the party bearing the cost, while indirect taxes are collected from one party but paid by another. Income tax can be collected at the source of income or in the country of residence through tax credits. Double taxation treaties determine which country has the right to tax different types of income like business profits, royalties, and fees to avoid double taxation between countries.
The document summarizes key proposals in the Indian Budget 2013 relating to direct and indirect taxes. For direct taxes, it outlines changes such as increased surcharge rates for foreign companies, a new tax on commodities derivatives trading, increased royalty and technical fee rates, and incentives for manufacturing investments over $20 million. It also covers proposals relating to power sector incentives, dividend distributions, and taxation of alternative investment funds. For indirect taxes, it notes customs, excise, and service tax changes.
TDS (Tax Deducted at Source) under section 194C of the Income Tax Act, 1961, pertains to payments made to contractors and subcontractors. When an individual or a business makes a payment to a contractor or subcontractor for carrying out any work (including supply of labour for carrying out such work), they are required to deduct TDS at specified rates from such payments.
The document discusses the definition and taxability of royalty under Indian income tax law and tax treaties. Royalty is broadly defined and includes payments for the use of intellectual property as well as technical knowledge and experience. Royalty income is generally taxable at a rate of 10-15% under tax treaties if not attributable to a permanent establishment, and at normal tax rates if attributable to an Indian permanent establishment. The document also provides illustrations to analyze whether payments constitute royalty or business income.
Key Takeaways
Analysis of definitions in Income tax act and treaties
Taxability under the act and treaties
IRoyalty vs. Business income
Illustrative Cases
Judicial Precedents
Budget 2016 was recently announced by the Finance Minister of India. This Presentation unravels the Transfer Pricing and International Tax proposals of the Budget 2016.
Taxation of Royalty - By CA Parul Aggarwalparul mittal
In Post BEPS era and with unprecedented technological advancement, the characterization of royalty payments and its subsequent taxation has gained paramount importance. With this, the tax structures have also undergone sea change. This presentation discusses the treaty interpretation through analysis of various case laws relating to characterization and taxability of royalty payment.
Long Term Visa (LTV) is granted to the following categories of persons of Bangladesh, Afghanistan and Pakistan coming to India on valid travel documents i.e. valid passport and valid visa, and seeking permanent settlement in India with a view to acquire Indian citizenship:-
i. Members of minority communities in Bangladesh/ Afghanistan/ Pakistan, namely Hindus, Sikhs, Buddhists, Jains, Parsis and Christians.
ii. Bangladesh/ Pakistan women married to Indian nationals and staying in India; or Afghanistan nationals married to Indian nationals in India and staying in India.
iii. Indian origin women holding Bangladesh/ Afghanistan/ Pakistan nationality married to Bangladesh/ Afghanistan/ Pakistan nationals and returning to India due to widowhood/ divorce and having no male members to support them in Bangladesh/ Afghanistan/ Pakistan.
iv. Cases involving extreme compassion.
Non-resident Indians are a section of people whose roots belong to India and who have migrated from India. The Indian Government is aware of the importance of Indian Diaspora in the form of NRIs/PIOs which is spread all across the world and which despite being away from India is making significant contribution to the Indian economy on a global platform and to the economic, financial and social benefits which have been brought to India; therefore, it attempts to provide benefits to them to attract their investments. They are also called for taking part in the economy. The Indian government gives lot of benefits to NRI not only with respect to ease of making investment in India but also in Taxation. The investment from NRIs is easy money available and provides the much needed leverage to the economy. The Indian Diaspora today constitutes an important, and inimitable, part of the Indian economy. The PPT discusses about he various account that can be opened by NRIs in India
Certificate course on FEMA_Presentation by Sudha G. Bhushan _ 14th May 2023.pdfTAXPERT PROFESSIONALS
The document provides an overview of a comprehensive course on foreign exchange management under the Foreign Exchange Management Act, 1999 (FEMA). It includes details of the faculty conducting the course, CA Sudha G Bhushan, as well as an outline of topics to be covered related to FEMA regulations for non-resident Indians, resident Indians, contraventions under FEMA, and residential status determination. Examples are also provided to illustrate residential status analysis for individuals and companies under various scenarios. The goal of the course is to explore opportunities and provide advisory services related to FEMA compliance.
In a move to further rationalize and liberalise the overseas investment central Government and Reserve Bank of India notified Foreign Exchange Management (Overseas Investment) Rules, 2022 and Foreign Exchange Management (Overseas Investment) Regulations, 2022 respectively on 22 Aug 2022.
The revised regulatory framework for overseas investment provides for simplification of the existing framework for overseas investment and has been aligned with the current business and economic dynamics. Immense clarity on Overseas Direct Investment and Overseas Portfolio Investment has been brought in and various overseas investment related transactions that were earlier under approval route are now under automatic route, significantly enhancing "Ease of Doing Business".
This document provides an overview of the legal, compliance and tax benefits available to startups in India under the Startup India scheme. Some key points include:
- Startups registered with DPIIT are eligible for self-certification of compliance under 6 labour laws and 3 environmental laws for 5 years.
- Income tax exemptions are available to DPIIT-registered startups under Section 80-IAC for any 3 years in the first 10 years of operations.
- Angel tax exemption under Section 56(2)(viib) is available for DPIIT-registered startups receiving share premium if total share capital and premium does not exceed Rs. 25 crore.
The document discusses how India's technology entrepreneurship will help create a $10 trillion economy by 2030. It outlines that India has a large population that is still young, a strong industrial and agricultural base, and adequate savings for investment and growth. The startup ecosystem in India is growing rapidly and will be a major driver of economic growth, creating millions of jobs and billions in valuation. Key government digital identity and financial inclusion initiatives like Aadhaar, UPI, and JAM provide foundational digital infrastructure to support this growth.
This document discusses the importance of working capital management for companies. It defines working capital as the difference between current assets and current liabilities. Effective working capital management is important to ensure liquidity while not overinvesting in current assets. The document analyzes working capital trends, efficiency using various ratios, and a company's liquidity position to evaluate working capital needs.
This short document appears to be about a ladies' wing and mentions it three times along with a tax corner, suggesting it is providing some basic information about sections within a building or organization dedicated to women and taxes.
As per section 92 of the Income Tax Act,1961 “Any
income arising from an international transaction shall
be computed having regard to the arm's length
price” Where in an international transaction two or
more associated enterprises enter into a mutual
agreement or arrangement for the allocation or
apportionment of, or any contribution to, any cost or
expense incurred or to be incurred in connection with
a benefit, service or facility provided or to be
provided to any one or more of such enterprises, the
cost or expense allocated or apportioned to, or, as
the case may be, contributed by, any such enterprise
shall be determined having regard to the arm's
length price of such benefit, service or facility, as the
case may be.
The 2008 Financial Crisis changed the world of Banking. Many malpractices by the Banks and various financial institutions came into light and the regulators started scrutinizing and penalizing them. The world’s most important number “LIBOR” came under the sword of the Regulators. In this article we will explore the origins and the fall of the once revered LIBOR rate.
Valuation under FEMA focuses on two main rules:
1. All current account transactions are allowed unless prohibited.
2. All capital account transactions are prohibited unless allowed.
FEMA established guidelines for valuation of shares and securities for foreign direct investment. For listed companies, the price cannot be less than that determined by SEBI guidelines. For unlisted companies, valuation must use an internationally accepted methodology certified by authorized persons. Convertible instruments must specify the conversion price upfront, which cannot be lower than the fair value at issuance.
THERE ARE QUITE A FEW REGULATORY SPACES
WHICH NEEDS TO BE KEPT IN CONSIDERATION
WHILE MAKING THE REPORT. IN THIS ARTICLE WE
SHALL DISCUSS REGARDING DRAFTING AND THE
CONTENT OF VALUATION REPORT ONE BY ONE IN
DETAIL.
One of the important aspect of Start up is raising of funds. Fundraising is a necessary, and most important task in the life of Start ups. IN THIS ARTICLE GIVES PRELIMINARY INSIGHTS INTO FUND RAISING BY STARTUPS
No, this transaction cannot be undertaken based on Section 3(b) of FEMA.
Section 3(b) prohibits making any payment to or for the credit of any person resident outside India in any manner. In this case, Shyam, who is resident in India, is making the payment for the credit of Pradeep, who is resident outside India (an NRI).
However, Regulation 6(2) of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 allows a resident in India to make certain specified payments in rupees to NRIs, such as for boarding/lodging during visit to India. But the given transaction, where an immovable property is being purchased, does not
The document discusses the due diligence requirements for cross border transactions and mergers. It covers:
- The key definitions under regulations for cross border mergers between an Indian company and foreign company.
- The allowability, vulnerability, accountability, and explainability aspects that must be considered for cross border transactions.
- The conditions under which an Indian company can merge with a foreign company or vice versa, including compliance with FEMA regulations, treatment of offices and assets/liabilities, valuation requirements, and other regulatory conditions.
- Specific provisions for inbound and outbound mergers depending on whether the resultant company is Indian or foreign. This includes timelines for compliance on guarantees, borrowings, and non-compliant assets.
The document discusses cross-border valuations and considerations under Indian regulatory framework. It outlines factors like cost of capital, treatment of currency and country risk, taxation rates, and treatment of earned versus remitted income in cross-border valuations. Methods for cross-border valuations including discounting cash flows in foreign currency or converting to home currency are described. Regulatory guidelines for pricing of instruments like shares, CCDs, and deferred payments are provided. Special situations like cross-border mergers are also covered. Overall, the document provides an overview of key aspects to consider for cross-border valuations under the Indian regulatory framework.
The document discusses various ways for foreign entities to invest and establish a presence in India, including incorporated and unincorporated entities. It provides details on types of unincorporated entities like liaison offices, branch offices, and project offices, as well as the regulatory requirements for establishing and operating each type. It also covers incorporated joint ventures and wholly owned subsidiaries and compares the characteristics of unincorporated vs incorporated structures.
The document discusses various ways for foreign investment in India including incorporated and unincorporated entities. It provides details on types of unincorporated entities like liaison offices, branch offices and project offices that can be established by foreign companies in India. It also summarizes the key differences between these types of unincorporated entities and incorporated joint ventures or wholly owned subsidiaries when it comes to permissions required, activities allowed, profit repatriation and other aspects. Further, it outlines the regulatory framework governing foreign investment in India including relevant regulations, rules and policies.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdfshruti1menon2
NIM is calculated as the difference between interest income earned and interest expenses paid, divided by interest-earning assets.
Importance: NIM serves as a critical measure of a financial institution's profitability and operational efficiency. It reflects how effectively the institution is utilizing its interest-earning assets to generate income while managing interest costs.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
https://36crypto.com/the-future-of-dogecoin-how-high-can-this-cryptocurrency-reach/
Discover the Future of Dogecoin with Our Comprehensive Guidance
Foreign Remittance
1.
2. Index
The remittance of fundsabroadfrom perspectiveof Income Tax Act,1961 (“IT Act”) requiresaclear understandingof itsprocessflow(rightfromthe applicabilityof the Act
to the procedure inwhichthe fundswill be remittedoutside India).Bywayof thispresentation,we have triedtosimplify the Income Tax provisionsforremittance of funds
abroad forour readers.The presentationisdividedintothe followingsegment:
Sr
No.
Particulars
1 Tax structure in India in case of foreign payments
2 Applicability
A. General Section
B. Specific Section
3 Procedure for remittance of funds abroad
3. Tax Structure in case of Foreign Payments
The taxabilitygloballyisdependentontwoprinciples:
- Residence based tax: Resident based taxationinstructs that, the country can tax persons if they are residents or domiciledin the country, regardless of the source of
income. In the case companies, the place of incorporation or registration of the entity or the place where its place of effective management is located is its place of
residence.
- Source basedtax: In the case of source-basedtaxationprinciple,importance istothe source (country) where income isgenerated.There are individuals/entitieswhose
“residence”isinone countrybut theirbusinessisactuallycarriedoninanothercountry,the income isconsideredtobe earnedinthe countrywhere business iscarried
on.
Whenthe transactionis carried on betweenpersonsof two differentcountries,the taxabilityinany countryis determinedasper provisionsof the domesticlawread with
the Double TaxationAvoidance Agreemententeredintobetweenthe Countries.InIndia, residence-basedtaxationrule isfollowed.
I. Income Tax Act, 1961
As perthe charging provisionof ITAct,the flowfor determiningtaxabilityinhandsof non-residentisasfollows:
Once the residential statusisdetermined,the scope of taxabilityof income isasunder:
Nature of Income Taxability in
hands of non-
resident
Income whichaccruesor arisesinIndia Taxed
Income whichisdeemedtoaccrue or arise in India Taxed
Sec 6 - Determining
Residential Status
Sec 5 - Basedon the
residentialstatus,ascertain
the scope of income
Sec 7,8 & 9 - Determine
whetherthe income
accrues/receives,deemto
accrue/arise/receive
4. Income whichisreceivedinIndia Taxed
Income whichisdeemedtobe receivedinIndia Taxed
Income accruing outside India from a business controlled from
Indiaor froma professionsetup inIndia
NotTaxed
Income otherthanabove (i.e.income whichhasnorelationwith
India)
NotTaxed
II. Double Taxation Avoidance Agreement
As perSection90(2) of the IT Act,the taxabilityincase of non-residentshall be more beneficialof:
- Double TaxationAvoidance AgreemententeredintobyCentral Government& Governmentof the otherCountry,or
- Provisionsof ITAct
The DTAA has variousarticlesgoverningtaxabilityof the Income.Fewarticlesare asfollows:
Article 6 Income from Immovable
Property
Article 11 Interest
Article 7 BusinessProfits Article 12 Royalties and Fees for Technical
Services
Article 8 Shipping, Inland waterways
transportand AirTransport
Article 13 Capital Gains
Article 10 Dividend Article 21 OtherIncome
Considering provisions of both the domestic laws and the DTAA, if the taxability falls under the scope of Indian Laws, the payment to non-resident shall be done after
withholdingtax asperapplicable provisions.
5. III. DTAA vs. the Act
Sec 90 & 90A of the Act authorises Central Government to enter into DTAA withother Countries/ ratifyDTAA betweenother specified associations for granting relief1
in
respectof income onwhichtax ispayable.
The relevantprovisionsunderthe Actandcorresponding ArticlesunderUN Model Conventionare summarisedinthe followingtable –
Nature of Income Underthe Act Underthe DTAA
Business/Profession Sec 9(1)(i) Article 5,7 & 14
Salary Income Sec 9(1)(ii) Article 15
DividendIncome Sec 9(1)(iv),Sec115A Article 10
InterestIncome Sec 9(1)(v),Sec115A Article 11
Royalties/ Fees for Technical
Services
Sec 9(1)(vi),Sec115A Article 12
Capital Gains Sec 9(1)(i),Sec45 Article 13
1 Rule 21AB- Certificate for claiming reliefunder an agreement referred to in sections 90 and 90A –Form 10F or all such information as may be prescribed to be furnished.
6.
7. There are few specific provisions in IT Act governing tax deduction when payments are made outside India. All the payments other than covered under specific provisions
are coveredunderSection195.
Analysis of Section 195(1)
Section195(1) of the Income Tax Act,1961 dealswithpaymentmade toNon-resident(otherthanCompany) andtoa ForeignCompany.The gistof the Sectionis as under:
- Whois responsible todeduct?
a) Anyperson - includingindividuals,HUF,Companies,PartnershipFirm
b) Whetherresidentornon-resident
- Payment to whom?
a) Non-residentandForeignCompanies
b) It doesn'tinclude ResidentbutNotOrdinaryResident
- Nature of payment
a) Interest(excludinginterestunderSection194LB, 194LC and 194LD) or anyothersum chargeable totax
b) Salariesandexemptdividendsare excluded
- What rate to apply
a) Deducttax at the rates inforce (as providedinthe Finance Act)
b) If DTAA available, ratesof income tax specifiedinthe Finance Actorthe ratesspecifiedinthe DTAA,whicheverismore beneficial shallapply.
- Whento deduct
a) The Act: At the time of paymentor creditof income to the account of the payee,whicheverisearlier
(Explanationtothe Sectionprovidesanexceptiontothe Government,PublicSectorBank& PublicFinancial Institution –Deductiononlyonpayment)
b) Tax Treaty:Anyspecificrequirementinthe treaty to deducttax needstobe adheredwithif treatyprovisionsare followed.
8. The examplesof fewratesinforce inIT Act withrespectto foreignincome are aspresentedbelow:
Section Nature of Income Rate of
tax (%)
Section115E Income inrespectof investmentmade byaNon-residentIndian 20
Section115E Income byway of long-termcapital gainsincase of Non-residentIndian 10
Section193 Income byway of long-termcapital gainsreferredtoinsub-clause(iii) of clause (c) of sub-section(1) of Section193 10
Section115A Income of Non-resident (not being a Company) by way of interest payable by Government or an Indian concern on money
borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest
referredtoinSection194LB or Section194LC
20
Section115A Income of Non-resident(notbeingaCompany) bywayof dividendsotherthandividendsreferredtoinsection115-O 20
Section115A income bywayof royaltyor feesfortechnical servicesotherthanincome referredtoinsub-section(1) of section44DA received
from Government or an Indian concern in pursuance of an agreement made by the foreign company withGovernment or the
Indianconcern
10
Section196B Income fromunits(includinglong-termcapital gainontransferof suchunits) toan offshore fund 10
Section196C Income fromforeigncurrencybondsorGDR of anIndiancompany(includinglong-termcapital gainontransferof such bondsor
GDR)
10
Section196D Income of ForeignInstitutional Investorsfromsecurities(notbeingadividendorcapital gainarisingfromsuchsecurities) 20
9. Specific Sections
The Tax Deductionat Source (TDS) is an importanttool of revenue collectionandtherefore more andmore itemsof income are beingaddedtothe alreadysubstantial items
liable to TDS. The objective behind applicationof TDS provision to Non-resident is to save the country from hassles of subsequent recoveries which may at times become
difficultdue togeographical distancesanddifferentlegal jurisdictions.Therefore,the burdeniscaston the “Personresponsible forpaying’tonon-residentstodeducttax on
the sum which is chargeable to tax at the rates, either prescribedunder the Act or appropriate Double Tax Avoidance Agreement (DTAA), which is lower.This method has
provedtobe a veryeffectivetool incollectionof taxesfromthe non-residents.
Few specificsectionswhichgovernsTDSdeductionincase of Non-residentIndiansandCompany(otherthanDomesticCompany) are asfollows:
Section Nature of payment Rate of tax
(%)
Section192 Paymentof Salary Normal Slab
Rate
Section194B Income byway of winningsfromlotteries,crosswordpuzzles,cardgamesandothergamesof any sort 30
Section194BB Income byway of winningsfromhorse races 30
Section194E Paymenttonon-residentsportsmen/sportsassociation 20
Section194EE Paymentinrespectof depositsunderNational SavingsScheme 10
Section194F Paymentonaccount of repurchase of unitby Mutual Fund or UnitTrust of India 20
Section194G Commission,etc.,onsale of lotterytickets 5
Section194LB Paymentof interestoninfrastructure debtfund 5
Section194LBA Certainincome distributedbyabusinesstrusttoitsunitholder 5
Section194LC Paymentof interestbyanIndianCompanyorabusinesstrustinrespectof moneyborrowedinforeigncurrency
undera loanagreementorby wayof issue of long-termbonds(includinglong-terminfrastructure bond)
5
Section194LD Paymentof interestonrupee denominatedbondof anIndianCompanyor GovernmentsecuritiestoaForeign
InstitutionalInvestorora QualifiedForeignInvestor
5
10.
11. A. TAX
A.1. LOWER DEDUCTION CERTIFICATE
A.1.1. Lower Deduction
The lowerdeductionisgovernedbySection195(2),195(3) and Section197. The brief of these sections isasunder:
Particulars Section195(2) Section195(3) Section197
Overview Payerhavingabelief thatportion(notthe whole
amount) of any sums payable by him to non-
residentisnotliable totax inIndia,maymake an
applicationtoAOto determine taxable portion
Payee may make an application to AO for
granting him a certificate to receive income
withoutTDS
Payee maymake anapplicationtoAOforgranting
himcertificate of ‘Nil’or‘lower’withholding.
Applicationby Payer Non-residentPayee Payee
Purpose Determination of portion of such sum
chargeable totax
No withholding Lower/NILwithholding
Form No specificformat Rule 29B – Form 15C & 15D Rule 28 – Form 13
Outcome AO to determine the appropriate proportion
chargeable totax andissue an orderaccordingly
Certificate issuedbythe AOsubjecttoconditions
specifiedinRule29B
Certificate to be issued by AO subject to
conditionsspecified inRule 28AA
Whether
appealable
u/s 248?
Yes – Afterpaymentof tax by the payer No appeal No appeal
13. A.2. OTHERS
A.2.1. Amount on which tax has to be deducted:
Personmakingpaymentto a non-residentisliable toTDS irrespective of legal orresidential statusof the payeror liabilitytowithholdTDSunderany otherprovisionsof the
Act.
The CBDT CircularNo.152 dated27th
November,1974 has clarifiedthatwhenitisnotpossible toknoworcompute the exactincomeelement,the deductionhastobe onthe
whole (gross) amount payable unless an order u/s. 195(2) of the IT Act has been obtained from the Income Tax Office making determination of the appropriate portionas
taxable income onwhichtax isdeductible.
A.2.2. Section195A – Grossingup
Inrespectof paymentmade ‘netof tax’ also, the payerisunderlegalobligationtofurnishTDScertificatetothe payee.Further,inrespectof “netof tax”payment,the circular
has clarifiedthatthe income grossedupu/s.195A is deemedtobe income of the payee u/s.198 of the Act. [Circularno. 785 dated24 November1999]
When the resident payer agrees to bear the burden of tax on payments due to the non-resident, the amount paidis consideredas net of tax payment and the payment is
requiredtobe grossedupfor calculationof tax liability. The grossedupamountwill be treatedas the amountagreedtobe paidandtax shall be calculatedatprescribedrate
on the gross amount.
Particulars Amount in
INR
Amount payable to the non-resident(netoftax) 100
Tax rate applicable 20%
Grossed-upincome:100*100/(100-20) 125
Tax payable (INR 125*20%) 25
Netamount paid to the non-resident(INR125-25) 100
14. A.2.3. Section206AA
Requirementtowithholdtax atthe higherof the followingratesif deductee failstoprovide itsPAN tothe deductor:
- Rate specifiedinthe relevantprovisionof the Act(i.e.specifiedratesinChpXVII-B);or
- Withholdingtax rate specifiedinFinanceAct;or
- Rate of20%
As perSection206AA(7),the sectionshall notapplytoa non-resident/foreigncompany,inrespectof:
- Paymentof interestonlong-termbondsreferredtoinSection194LC; and
- Anyotherpaymentsubjecttosuch conditionsasmaybe prescribed
Further, the Section also prescribes that no certificate under section 197 shall be granted unless the application made under that sectioncontains the Permanent Account
Numberof the applicant.
Rule 37BC provides relaxationfromdeductionoftaxathigherrate undersection206AA.Section206AA shall notapply onthe followingpaymentstonon-residentdeductees
whodon’thave PAN in India, subjecttodeductee furnishingthe specified detailsanddocumentstothe deductor:
- Interest;
- Royalty;
- FeesforTechnical Services; and
- Paymentontransferof any capital asset
In respectof the above,the deductee shall be requiredtofurnishthe followingtothe deductor:
(i) name,e-mail id,contactnumber;
(ii) addressinthe country or specifiedterritoryoutside Indiaof whichthe deductee isaresident;
(iii) a certificate of his being resident in any country or specified territory outside India from the Government of that country or specified territory if the law of that
countryor specifiedterritoryprovidesforissuance of suchcertificate;
(iv) Tax IdentificationNumberof the deductee inthe countryor specifiedterritoryof his residence andincase no such numberis available,thena unique numberon
the basisof whichthe deductee isidentifiedbythe Governmentof thatcountryor the specifiedterritoryof whichhe claims tobe a resident.]
15. The implicationof the provisionissummarizedinthe followingtable –
PAN Tax Residency
Certificate (TRC)
Does treaty provide for
lowerrate?
Applicable withholding
tax rate
Treatyrate
Rate as perIT Act
Act rate subjecttoSec
206AA
A.2.4. Consequencesofnon-compliance inanyof the provisionsmentionedinthis article
16. B. REMITTANCE OF FUNDSABROAD
B.1. Certificate furnishedbyCharteredAccountant2
The CBDT vide NotificationNo.30/2009 dated25th
March, 2009 issuedIncome-tax (SeventhAmendment) Rules,2009 and prescribedfollowingformatsthroughinsertionof
Rule 37BB –
- Form 15CA – Formatfor furnishingprescribedinformationandverificationbythe payee,
- Form 15CB – Format forcertificate fromCharteredAccountant
These provisionsbecameeffective from1st
July,2009.
The form 15CA & 15CB are bifurcatedintopartsas presentedbelow:
2 Rule 37 BBofthe Income Tax Rules prescribes certain nature ofpayment for which furnishing certificate is not required.
17. Process flow for furnishing CA certificate and remitting funds outside India:
Further, for the purpose of conversion, as per Rule 26 of the Income Tax Rules, the payer needs to ensure that the taxesdeducted at source are converted by applying SBI
TelegraphicTransferBuyingRate.
18. To avoid excess tax or double tax to be paid in India, it is essential to have complete knowledge of provisions of the Act
&
In case the excess payment is made, file ITR and claim refund of such excess amount.