TAX CONSULTING

Introduction: In recent times Government of India has opened the Indian market and economy to attract more and more foreign capital and technical know-how.The foreign investors may be Indian Nationals who resided outside India and other foreign investors including corporations.A   person who resides outside India is technically known as "non-residents". The residential status   of an individual does not depend upon the nationality or domicile of that person but it depends   upon his stay in India during the previous year.
                                    In cases other than an individual, the residence depends upon the place from   which its affairs are controlled and managed. If the control and management of the affairs of a   foreign company is, during the previous year,located wholly in India, it shall be treated as resident   in India. Where part of the control and management of the affairs of a foreign company is situated   outside India, it shall be treated as non resident company.

Residential Status:An individual can be termed as a 'resident' if he stays for the prescribed period   during a fiscal year either for:

182 days or more or
60 days or more (182 days or more for NRIs) and has been in India in aggregate for 365 days or more in the previous 4 years

Any person who does not satisfy these norms is termed as a 'non-resident'. A resident individual is considered to be ordinarily resident in any fiscal year if he has been resident in India for nine out of the previous ten years and, in addition,has been in India for a total of 730 days or more in the previous seven years.Residents who do not satisfy these conditions are called individuals not ordinarily resident. The table below gives the taxability of the individuals:

Status	Indian Income	Foreign Income
Resident and ordinarily resident	Taxable	Taxable
Resident but not ordinarily resident	Taxable	Not taxable
Non Resident	Taxable	Not taxable

                                                                 Back To Top

Taxable Income: Certain Incomes of non-residents Taxable in India are:

Profits of Business
Income from property in Indias
Income form any assets or source India
Income form money brought into India and lent on interest
FFees for technical services and royalties
Double taxation relief-- to avoid double taxation on the same income in two countries, the central government may enter into an agreement with the government of any country outside India.
a) for grants of relief in respect of income on which income tax has been paid both under this act and income tax has been paid both under this act in that country
b) for the avoidance of double taxation of income under this act and under the corresponding law in force in that country

                                                                 Back To Top

Exceptions: With effect form assessment year 1989-90 the following incomes are wholly exempted from income tax for non
residents-

Securities and Bonds
Any income by way of interest on such securities or bonds including income by way of premium on the redemption of such bonds
Interest on National savings certificates
Leave travel concession : this concessions was earlier given to residents only has been extended to non residents from the assessment year 1989-90,exemption will be limited to the amount actually spent
Remuneration for shooting any cinematographic film
Certain incomes of individuals not a citizen of India irrespective of their residential status
Tax holiday for foreign technicians in in certain cases
Remuneration for service on a foreign ship
Remuneration for foreign professors and teachers provided the condition laid down therein satisfied
Remuneration for doing research work In India by foreigners
Remuneration of foreign government employees for training
Specially low rate of income tax on dividends, royalties, interest from securities, fees for technical services in the case of foreign companies
Tax paid by a Government or an Indian concern to a non resident (not being a company) or a foreign company on any income derived pursuant to an agreement entered into by the central government of a foreign state or an international organisation is also exempt from tax with effect from 1-04-88
Interest received by a non resident Indian from such bonds as notified by the Central Government or by any individual owning thebonds by virtue of being a nominee or survivor of such non resident Indian or by an individual to whom the bonds have been gifted by the non resident, will not be included in computing the total income of such individual. The bonds should have been purchased by a non resident Indian in foreign exchange and the interest & principle received in respect of such bonds whether on their maturity or otherwise is not allowable to be taken out of Indian. Even where the individual who is non resident Indian in the previous year in which the bonds are acquired, becomes a resident in India in any subsequent year, the interest received from such bonds will continue to be exempt in the subsequent years as well. In case of premature encashment of the bonds,the exemption shall stand withdrawn from the year of encashment

                                                                   Back To Top

Non taxable Income:

Incomes accuring to the non resident on the sale of plant and machinery on installment basis is taxable
Foreign Agent of an Indian Exporter as he operates in his own country and no part of his income arises in India
Non resident person purchasing goods in India
Sale by a non resident to Indian customer, where the non resident has an agent in India but he sells directly to Indian customers,he will not be assessable notwithstanding that he pays an overriding commission on all sales in India

                                                                    Back To Top