1. Global Tax Impact - FTC India Rules
Presented by
Suresh Kumar B S
Associate Director - Taxation

2. Index
DTAA Provisions
FTC Rules, 2016
FTC Risk
OECD Model Convention
Risk continues till company attains certain
% of profit

3. DTAA Provisions- WHT
DTAA b/w India and
US Singapore Japan*
FTC rules
Article No. 12 12 12
Nature of payment
as per DTAA
Royalties &
FTS
Royalties &
FTS
Royalties &
FTS
Rate of WHT 15 10 10

4. FTC Rules, 2016
 FTC available against - tax, surcharge & cess payable
and not in respect of interest, fee or penalty.
 FTC - aggregate of amount of credit computed separately for each
source of income arising from a particular country outside India
and credit shall be the lower of
• Tax payable on such foreign income /assessed to tax in India
OR
• Foreign Withholding Tax (restricted to DTAA rates)
 Documents required to claim FTC
• Form No. 67
• Certificate/statement

5. FTC Risk of Company based on estimated NP Margin
Particulars Singapore Japan
WHT rate (%) 10 10
Basis As per DTAA As Per DTAA &
Certificate
Effective tax based on 15% Net
Profit Margin (Profit
%*33.063%)
5 5
FTC under Risk (%) (WHT – Effective
corporate tax)
5 5
Tax Risk Based on 35 % of the TO is
attributable Exports/ Japan
Aprx 2 -3 lacs Aprx 2-3 lacs

6. OECD Convention Model
Chapter V – Elimination of Double Taxation :
 Article 23 B – Credit Method
• Deduction - an amount equal to the withholding tax paid in
the other state.
• Such deduction shall not, exceed income tax which is
attributable to the income on which withholding tax is
deducted and paid

7. Risk continues to be exist till company attains certain % of profit
Particulars WHT @ 15% WHT @ 10%
Income 100 100
Expenditure 55 70
Profit 45 30
Corporate tax rate 33 33
Tax amount 15 10