TAX PLANNING AND NON RESIDENTS

·         TAX PLANNING AND NON RESIDENTS

·         CORPORATE TAX PLANNING

·         SCOPE OF TOTAL INCOME OF NON RESIDENT( SEC 5(2)

1.     INCOME RECEIVED OR DEEMED TO BE RECEIVED IN INDIA DURING THE RELEVANT ACCOUNTING YEAR. DATE AND LOCATION IS NOT RELEVANT

2.     INCOME WHICH ACCRUES OR DEEMED TO ACCRUED IN INDIA DURING RELEVANT YEAR.

·         TYPES OF INCOME

1. INDIAN INCOME
2. FOREIGN INCOME

·         INDIAN INCOME:-

1. INCOME IS RECEIVED IN INDIA
2. DEEMED TO BE RECEIVED IN INDIA
3. ACCRUE OR ARISE IN INDIA
4. DEEMED TO ACCRUE OR ARISE IN INDIA

·         TYPES OF INCOMES

·         FOREIGN INCOME

1. INCOME EARNED OR ACCRUES OUTSIDE INDIA AND ALSO RECEIVED OUTSIDE INDIA
2. ANY INCOME WHICH IS NOT EARNED OR ACCRUES OR ARISES IN INDIA

·         INDIAN INCOME

• INCOME RECEIVED IN INDIA:-MUST RECEIVE INCOME IN INDIA DURING THE RELEVANT PREVIOUS YEAR AND IT MAY BE FROM ANY SOURCE. ALL PERSONS ARE ASSES SABLE OF INCOME RECEIVED IN INDIA ( RESIDENTIAL STATUS IS IRRELEVANT)
• INCOME DEEMED TO BE RECEIVED IN INDIA:- NOT ACTUALLY RECEIVED BY  A PERSON BUT LAW CONSIDERS THEM AS INCOME DEEMED TO BE RECEIVED IN INDIA FOR EXAMPLE:- TDS,DIVIDEND DISTRIBUTED/DEEMED TO BE DISTRIBUTED U/S 2(22) WILL BE DISTRIBUTED IN THE PREVIOUS YEAR.

·         INCOME WHICH ACCRUES OR ARISES IN INDIA:- HELD TO ACCRUE OR ARISE TO AN  ASESSEE ONLY WHEN THE ASSESS OBTAINS A RIGHT TO RECEIVE THAT INCOME.WHEN IT IS ACTUALLY DUE.

·         WHERE THE ORIGIN OR SOURCE OF GROWTH OR INCOME IS SITUATED.

·         INCOME DEEMED TO ACCRUE OR ARISE IN INDIA

·         INCOME ARISING FROM BUSINESS CONNECTION IN INDIA(SEC 9(1)(i)

1.     BUSINESS CONNECTION SHALL INCLUDE ANY BUSINESS ACTIVITY CARRIED OUT THROUGH A PERSON WHO ACTING ON BEHALF OF THE NON RESIDENT:

2. TO CONCLUDE CONTRACT ON BEHALF OF THE NR
3. MAINTAIN STOCK OF GOODS/MERCHANDISE
4. SECURE ORDER FOR NR

·         BUT FOLLOWING INCOME IS NOT DEEMED TO ACCRUE OR ARISE FROM BUSINESS CONNECTIONS:-

1. BUSINESS ACTIVITY CARRIED OUT THROUGH SPECIFIED PERSON
2. PURCHASE OF GOODS FOR EXPORT
3. BUSINESS OF NEWS AND PUBLISHING NEWS PAPER
4. INCOME FORMS SHOOTING OF ANY PICTURE IN INDIA

·         INDIAN INCOME

·         INCOME FROM ANY PROPERTY HELD IN INDIA AND ASSETS OR SOURCES OF INCOME LOCATED IN INDIA:- PROPERTY INCLUDE BOTH MOVABLE AND IMMOVABLE BUT DOES NOT INCLUDE INTANGIBLE ASSETS

·         IN CASE A COMPANY CARRIES ON BUSINESS IN INDIA AND PAYS DIVIDEND OUT OF INDIA,DIVIDEND ARISE DIRECTLY FROM A SOURCE OF INDIA AND WILL BE DEEMED TO ACCRUE OR ARISE IN INDIA

·         INCOME FROM TRANSFER OF CAPITAL ASSET SITUATED IN INDIA

·         IN CASE OF A BUSINESS OF WHICH ALL THE OPERATIONS ARE NOT CARRIED IN THAT INDIA ONLY THAT PART WHICH IS REASONABLY ATTBUTIABLY TO THE OPERATION  INDIA.

·         INDIAN INCOME

·         SALARIES EARNED IN INDIA( SEC 9(1)(III)

·         DIVIDEND PAID ABROAD BY INDIAN COMPANY

·         INCOME BY WAY OF ROYALTY( SEC 9(1)(VI):

·         ROYALTY PAID BY GOVT OR A PERSON WHO IS RESIDENT

·         OR TO NON RESIDENT WHERE THE ROYALTY IS PAYABLE IN RESPECT OF RIGHT,PROPERTY OR INFORMATION UTILIZED FOR EARNING INCOME IN INDIA

·         INCOME BY WAY OF FEES FOR TECHNICAL SERVICES ( SEC 9(1)(VII):FEES PAID BY GOVT OR A PERSON WHO IS RESIDENT

·         OR TO NON RESIDENT WHERE FEES IS PAYABLE IN RESPECT OF SERVICES UTILIZED FOR EARNING IN INDIA

• SPECIAL TAX PROVISIONS RELATING TO COMPUTATION OF INCOME OF NON RESIDENTS
• SPECIAL RATES ON DIVIDEND AND INTEREST INCOME TO NON RESIDENTS( SECTION 115A TO 1115 BBA)
• SPECIAL PROVISIONS IN RESPECT OF NON RESIDENTS( SEC 115 C TO 115 I)
• PROVISIONS RELATING TO APPOINTMENT OF AGENTS OF NON RESIDENTS( SEC 160 TO 163)

•  NON RESIDENTS AND ADVANCE RULING SYSTEM
• TAX PLANNING FOR NON RESIDENTS

·         SPECIAL TAX PROVISIONS RELATING TO COMPUTATION OF INCOME OF NON RESIDENTS

·         FROM SHIPPING BUSINESS(44AB)

1.     CARRYING ON THE BUSINESS OF SHIP,A SUM EQUAL TO 7.5% OF THE AGGREGATE OF THE AMOUNT SPECIFIED BELOW:-

2. RECEIVED ON ACCOUNT OF CARRIAGE OF PASSENGERS.LIVE STOCK AND MAIL OR GOODS SHIPPED IN INDIA
3. RECEIVED OR DEEMED TO BE RECEIVED ON ACCOUNT OF CARRIAGE OF PASSENGERS.LIVE STOCK AND MAIL OR GOODS SHIPPED IN INDIA
4. ALSO DEMUR RAGE CHARGES PAID/HANDLING CHARGES

·         OIL EXPLORATION( SEC 44BB)

1.     SERVICE OR FACILITIES IN CONNECTION WITH OR SUPPLYING PLANT AND MACHINERY ON HIRE USED OR TO BE USED IN PROSPECTING/EXTRACTION OF OIL/PRODUCTION OF MINERAL OIL A SUM EQUAL TO 10 % OF THE AGGREGATE OF THE FOLLOWING DEEMED PROFIT.

2. AMOUNT PAYABLE OR PAID(IN INDIA/OUTSIDE INDIA
3. ANY AMOUNT FOR SUCH EXPLORATION OR PRODUCTION OF MINERAL OILS OUTSIDE INDIA

·         SPECIAL TAX PROVISIONS RELATING TO COMPUTATION OF INCOME OF NON RESIDENTS

·         BUSINESS OF OPERATION OF AIRCRAFT(SEC 44BBA)

1. AMOUNT PAYABLE OR PAID TO ASSESSEE( IN INDIA OR OUTSIDE)CARRIAGE OF PASSENGERS.LIVE STOCK AND MAIL OR GOODS SHIPPED IN INDIA
2. ANY SUCH AMOUNT FROM ANY PLACE OUTSIDE INDIA
3. A SUM EQUAL TO 5 % OF THE AGGREGATE OF THE ABOVE MENTIONED AMOUNT SHALL BE DEEMED TO BE PROFIT

·         CAPITAL GAINS OR SHARES AND DEBENTURES IN INDIAN COMPANIES EARNED BY NR

1.     BY USING FOREIGN CURRENCY

2.     MUST HAVE BEEN TRANSFERRED DURING PREVIOUS YEAR

3.     THE SHARES/DEBENTURES MAY BE SHORT TERM/LONG RUN

4.     THE ACT PRESCRIBED SPECIFIED MECHANISM TO COMPUTE GAINS AND THE GAIN SHALL BE FULLY EXEMPTED UNDER 10(38) IF SUCH TRANSACTIONS WAS ENTERED THROUGH STOCK EXCHANGE AND WAS SUBJECT TO SECURITY TRANSACTION TAX

·         SPECIFIED RATES OF TAX ON CERTAIN SPECIFIED INCOME TO NON RESIDENTS

·         PROVISIONS RELATING TO APPOINTMENT OF AGENTS TO NR( SEC 160 TO 163)

1.     AGENT TO BE TREATED AS REPRESENTATIVE ASSESS FOR NR

2.     OPPORTUNITY OF BEING GIVEN HEARD

·         THE FOLLOWING PERSONS ARE TREATED AS AGENTS:-

1. EMPLOYED BY OR ON BEHALF OF THE NON RESIDENTS
2. BUSINESS CONNECTION WITH THE NR
3. THROUGH WHOM THE NR IS IN RECEIPT OF INCOME DIRECTLY OR INDIRECTLY
4. TRUSTEE OF THE NON RESIDENT

·         TAX PLANNING

1.     RECEIVE FOREIGN INCOME OUTSIDE INDIA

2.     DEPOSITING MONEY IN NON RESIDENT EXTERNAL ACCOUNT

3.     EXEMPTION OF INTEREST ON BONDS OR SECURITIES NOTIFIED BEFORE 1/6/2002 BY THE CG INCLUDING PREMIUM REDEMPTION OF SUCH BONDS

4.     INTEREST ON MONEY STANDING TO THE CREDIT IN A NON RESIDENT EXTERNAL ACCOUNT( SEC 10(4(iii)

5.     EXEMPTION  AVAILABLE ON NOTIFIED SAVING CERTIFICATES ISSUED BEFORE 1/6/2002 BY THE CG AND SUBSCRIBED TO CONVERTIBLE FOREIGN CURRENCY

6.     TAKING BENEFIT OF DOUBLE TAXATION AGREEMENTS

7.     MAKING USE OF SYSTEM OF ADVANCE RULING