ATION OF NON RESIDENTS ambusaria, 2011
e 2 ENTS sidence pe of Total Income ome deemed to accrue or arise in India sumptive based taxation for Non residents ecific Provisions for Taxation of Non residents x Incentives for Non residents
ENCE (SEC 6) vidual sident and ordinary Resident e 3 In India for 182 days or more Or ) In India a period of 60 days or more during the PY and 365 days or more during 4 years immediately preceding the PY He has been resident in India in at least 2 out of 10 PY immediately preceding the relevant PY And ) He has been resident in India for 730 days or more during immediately preceding the relevant PY Resident but not ordinary resident a) In India for 182 days or more Or b) In India a period of 60 days or more during the PY and 365 days or more during 4 years immediately preceding the PY One or none of (i) or (ii) Non- resident Should not satisfy any of th basic condition
IDENCE (Sec 6) mpanies Residential Status: Other than individuals HUF/Firm and AOP Company Resident unless control & Management wholly outside India Indian Company or where a foreign company s control and management is wholly in India e 4
E OF TOTAL INCOME (SEC 5) vidual tax payers Resident and Ordinary Resident Worldwide Income Taxable Resident but not Ordinary Resident Income received or deemed to be received in India Income accruing or arising or deemed to be accruing or arising in India Income from a business controlled wholly or partly in India or from profession set up in India Non Resident Only income received or deemed to be received in India or accruing or arising or deemed to accrue or arise in India e 5
E OF TOTAL INCOME (SEC 5) er than individual taxpayers Resident Non Resident Income received/deemed to be received in India Accrues/arises/deemed to accrue or arise in India Income received/ accrues/arises or deemed to be received/ accruing/arising outside India Income received/deemed to be received in India Accrues/arises/deemed to accrue or arise in India Subject to provisions of section 90 and relevant DTAA e 6
E DEEMED TO ACCRUE OR ARISE IN INDIA ion Source Description i) Business Income Income from a business connection in India or through or from any property or capital asset or source of income or transfer of capital asse situated in India. ii) Salaries Salaries for services rendered in India. iii) Salaries Salaries by Govt. for services outside India. iv) Dividend Dividend paid by an Indian Company outside India. (now Exempt) v) Interest Interest by Govt. or by a resident (unless for a business or source outsid India) vi) Royalty Royalty by Govt. or a resident (unless for a business or a source outsid India) / Definition in DTAA to be also considered vii) FTS Fees for Technical Services (FTS) by Govt. or a resident (unless for a business or a source outside India)/ Definition in DTAA also to be considered Make available concept in certain treaties. e 7
UMPTIVE BASED TAXATION OF NON RESIDENTS engaged e ess of entage of ble Section 44B Operation of Ships Section 44BB Providing services and facilities in connection with, or supplying plant and machinery on hire, used or to be used in the exploration for, and exploitation of mineral oils 7.5 10 5 Section 44BBA Section 44BBB Section 172 Operation of Aircraft Civil Construction or erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project 10 7.5 In shipping business e 8
UMPTIVE BASED TAXATION OF NON RESIDENTS tion 44B vis-à-vis Section 172 Section 44B Section 172 riding effect It overrides all other provisions of the Act subject to availing the facility of regular assessment u/s 172(7) It overrides sections 28 to 43A ff and carry ard of losses ctions from GTI 0C to 80U iability 7.5 % of the amount received on account of carriage of goods, passengerss etc., is taxable income Available Available 7.5% of the specified collections taken as business income; other provisions will be applicable to find out taxable income which w be taxed at the rates applicable NR e 9
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it necessary to s return of income? (a) a. Dividend ( covered u/s 115-O) Available Available 20% ## e 1 b. Interest received from Govt. or an Indian concern on moneys borrowed or debt incurred by Government of the Indian concern in foreign currency Available Available 20% ## e 1 c. Income in respect of units, purchased in foreign currency, of a mutual fund specified under clause (23D) of sec 10 or the UTI Available Available 20% ## e 1 e 10
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income b) Royalty or technical fees of a non-resident non-corporate assessee or a foreign company Deduction u/s 28 to 44C & 57 Refer e 2 Benefit of computing capital gain in foreign currency a. Income received in respect of units purchases in available foreign currency Deductions u/s 80C to 80U Refer e 2 available Tax rate 10% ## Also refer e 2 Is it necessary to submit return of income? Yes Yes b. Income by way of longterm capital gains arising from transfer of units purchased in foreign currency ---- Fist proviso is not relevant Second proviso to sec 48 is not applicable 10% ## 10% ## Yes e 11
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS n Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it nece to submit return of income? The following incomes of a non-resident: a. Income by way of interest or dividends, on bonds or GDR of an Indian Co. issued in accordance with the notified in accordance with the notified scheme, i.e., Foreign Currency Convertible Bonds and Ordinarily GDRs (Through Depository Receipt Mechanism) Scheme, 2008 or( with effect from October 1, 1996) on bonds/ GDRs of a public sector company sold by the Govt. & purchased by him in foreign currency Available 10% ## e 1 b. Income by way of long-term capital gains arising from the transfer of bonds or, as the case may be, GDR referred above First & Second provisos* to sec 48 are not applicable 10% ## Yes e 12
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it necess submit ret income a. Income from GDR held by a resident individual who is employee of an Indian Co. engaged in specified knowledge based industry or service or an employee of its subsidiary engaged in specified knowledge based industry or service Yes Dividend on GDR of an Indian Co. engaged in specified knowledge based industry/service issued under notified employees stock option scheme and purchased in foreign currency available 10% ## Yes Long term capital gain on transfer of such receipts First & Second provisos * to sec 48 are not applicable 10% ## Yes e 13
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it nece to submit return of income a. Income received in respect of securities listed in a recognized stock exchange in India in accordance with the provisions of the Securities contracts(regulation) Act, 1956, and any rules made there under b. Income by way of short-term or long-term capital gains arising from the transfer of such securities available First & Second provisos* to sec 48 are not applicable 20% ## Yes Long-term : 10% ## Short-term u/s 111A: 10%( 15 % ## from the AY 2009-10), Any other shortterm 30% ## Yes e 14
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it nece subm retur incom The foll Income of a nonresident sportsman who is a foreign citizen i. Participation in India in any game (other than a game the winnings where from taxable under section 115BB) or sport; or 10% ## e ii. Advertisement; or 10% ## e iii. Contribution of articles relating to any sport in India in Newspapers, magazines or Journals 10% ## e e 15
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS Nature of Income Deduction u/s 28 to 44C & 57 Benefit of computing capital gain in foreign currency Deductions u/s 80C to 80U Tax rate Is it neces to submit return of income Any amount guaranteed to be paid or payable to a non-resident sports association or institution in relation to any game( not being a game referred to in sec 115JB) or sports played in India a. Investments income from foreign exchange assets b. Long-term capital gain on transfer of foreign exchange assets available No deduction under any provision --- First proviso to section 48 is applicable but not the second proviso 10% ## e 1 20% ## 10% ## e 1 e 1 e 16
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS here an assessee acquires shares or bonds, as the case may be, in a resulting or amalgamated ompany by virtue of his holding shares in the amalgamation or demerged company in accordance with he provisions of section 115AC(1), the provisions of section 115AC91) shall apply to such shares or onds. e concessional rate of 10% has been extended to GDRs ovt. also issued under notified schemes of the central lus surcharge, education cess and secondary and higher education cess e Taxpayer is not entitled to the benefit of indexation Universities Superannuation Scheme Ltd., In e[2005] 145 Taxman 141( AAR New Delhi) ecified knowledge based industry or service means information technology software/services, tertainment service, pharmaceutical industry, bio-technology industry or any other notified industry service e 17
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS - It is not necessary for an assessee referred to in section 115A(1), 115AC(1), 115BBA or 115D to furnish urn of income under section 139(1) if : income in respect of which he is assessable under the Act during the previous year consisted only of ome referred to in section 115A(1)(a), or 115AC(1)(a), or 115BBA or section 115D; and e tax deductible at source under the Act has been deducted from such income. - in case where royalty income is effectively connected to the PE the same would be taxed as per the visions of section 44DA on net basis e 18
IFIC PROVISIONS ON TAXATION OF NON RESIDENTS utation of Capital Gains in the case of non-resident (First Proviso to Section 48) ditions to be fulfilled: he taxpayer is a non resident at the time of sale of Capital Asset e acquires shares in (or debentures of) an Indian company (public limited or private limited) by utilizing fore urrency he asset may be short term or long term le Consideration st of Acquisition penditure on Sale pital Gain Mode of Computation The consideration in Indian currency to be converted in Foreign currency at average exchange rate on the date of transfer = A The cost in Indian currency to be converted to foreign currency at average exchange rate on date of acquisition = B Expenditure incurred in Indiann currency to be converted in Foreign currency at average exchange rate on the date of transfer = C A B C = Capital Gains in Foreign Currency to be converted into Indian Currency at buying rate on the date of transfer e 19
NCENTIVES TO NON RESIDENTS me from the following investments made by NRIs out of convertible foreign exchange is totally mpt from tax: eposits in the following types of bank accounts i) Non Resident External Rupee Account ii) Foreign Currency Non Resident Account nits of Unit Trust of India and specified mutual funds, other specific securities, bonds and savings ertificates (subject to conditions prescribed under the Income-tax laws and regulations) ong term capital gains arising from transfer of equity shares in a company and/or equity oriented chemes of Mutual Funds, which are subject to Securities Transaction Tax e 20