Tag: CBDT

Ten steps for overhaul of ARCs as competition for bad bank arrives, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


In a bid to streamline the functioning of asset reconstruction companies (ARCs), a Reserve Bank committee has come out with a host of suggestions including the creation of an online platform for the sale of stressed assets and allowing ARCs to act as resolution applicants during the IBC process.

Amortise loss

To incentivise lenders to sell their financial assets to ARCs at an early stage of stress, the RBI panel has recommended a dispensation to lenders, on an ongoing basis, to amortise the loss on sale, if any, over a period of two years. To optimise upside value realisation by lenders, it recommends a higher threshold of investment in security receipts (SRs) by lenders, below which provisioning on SRs held by them may be done on the basis of Net Asset Value (NAV) declared by the ARC instead of IRACP norms.

Online platform

An online platform may be created for sale of stressed assets and infrastructure created by the Secondary Loan Market Association (SLMA) may be utilised for this purpose. For all accounts above Rs 500 crore, two bank-approved external valuers should carry out a valuation to determine the liquidation value and fair market value and for accounts between Rs 100 crore to Rs 500 crore, one valuer may be engaged. Also, the final approval of the reserve price should be given by a high-level committee that has the power to approve the corresponding write-off of the loan.

Acquiring financial assets

In the interest of debt aggregation, the scope of Section 5 of the SARFAESI Act, and other related provisions, may be expanded to allow ARCs to acquire ‘financial assets’ as defined in the Act, for the purpose of reconstruction, not only from banks and ‘financial institutions’ but also from such entities as may be notified by RBI. RBI may consider permitting ARCs to acquire financial assets from all regulated entities, including AIFs, FPIs, AMCs making investment on behalf of MFs and all NBFCs (including HFCs) irrespective of asset size and from retail investors. ARCs should be allowed to sponsor SEBI registered AIFs with the objective of using these entities as an additional vehicle for facilitating restructuring/ recovery of the debt acquired by them.

Binding on lenders

If 66% of lenders (by value) decide to accept an offer by an ARC, the same may be binding on the remaining lenders and it must be implemented within 60 days of approval by majority lenders (66%). 100% provisioning on the loan outstanding should be mandated if a lender fails to comply with this requirement. Given that the debt aggregation is typically a time-consuming process, the planning period is elongated to one year from the existing six months. In cases where ARCs have acquired 66% of debt of a borrower, the Act should provide for two years of moratorium on proceedings against the borrower by other authorities. The Act should also provide that Government dues including revenues, taxes, cesses and rates due to the Central and state governments or local authority will be deferred in such cases.

Equity sale

For better value realisation for originators and enhancing the effectiveness of ARCs in recovery, even the equity pertaining to a borrower company may be allowed to be sold by lenders to ARCs which have acquired the borrower’s debt. The Committee recommends that ARCs may be allowed to participate in the IBC process as a Resolution Applicant either through a SR trust or through the AIF sponsored by them.

Allowing HNIs to buy SRs

For giving impetus to listing and trading of SRs, the list of eligible qualified buyers may be further expanded to include HNIs with minimum investment of Rs 1 crore, corporates (Net Worth-Rs 10 crore & above), all NBFCs/ HFCs, trusts, family offices, pension funds and distressed asset funds with the condition that (a) defaulting promoters should not be gaining access to secured assets through SRs and (b) corporates cannot invest in SRs issued by ARCs which are related parties as per SEBI definition.

Minimum SR investment

The interest of investors and investing lenders should be weighed against the need for distribution of risk among the willing investors. Therefore, it recommends that for all transactions, per SR class/ scheme, the minimum investment in SRs by an ARC should be 15% of the lenders’ investment in SRs or 2.5% of the total SRs issued, whichever is higher.

Credit rating agencies

Recognising the critical role of Credit Rating Agencies (CRAs) in the valuation of SRs and, therefore, the need for continuity in engagement of CRAs, the Committee recommends that ARCs must retain a CRA for at least three years. In case of change of a CRA, both parties must disclose the reason for such change.

Tax pass through

In the matter related to taxation of income generated from investment in SRs issued by ARCs, the possibility of a ‘pass-through’ regime for AIF investors may be looked into by the Central Board of Direct Taxes (CBDT). The CBDT may consider clarifying on the tax rate applicable to FPIs.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

RBI authorises Karur Vysya Bank to collect direct taxes, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Private sector Karur Vysya Bank on Tuesday said it has commenced the integration process with the Central Board of Direct Taxes to collect direct taxes on its behalf, following the approval it received from the Reserve Bank. “Reserve Bank of India has authorised Karur Vysya Bank to collect direct taxes on behalf of Central Board of Direct Taxes. Following the approval received, the bank has initiated the integration process with CBDT“, the Tamil Nadu based-bank said in a statement.

Once the integration process gets completed, the bank customers can remit the direct taxes through any branch or through net banking or mobile banking services (DLite Mobile application).

“It has been the long standing requirement of our customers that they should be able to pay their direct taxes through our bank. We are happy that we will be in a position to offer this service to our customers”, the bank’s MD and CEO, B Ramesh Babu said.

Follow and connect with us on , Facebook, Linkedin



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

CBDT, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


In order to make disinvestment deals of ailing state-owned firms more attractive for strategic investors, the government on Friday allowed erstwhile public sector companies to carry forward losses to be set off against future profits. The Central Board of Direct Taxes (CBDT) in a clarification said that Section 79 of the Income Tax Act shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment.

“Accordingly, loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company,” the CBDT under the Finance Ministry said in a statement

The relaxation, it added, will cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold 51 per cent of the voting power of the erstwhile company.

Section 79 of the Income Tax Act deals with carry forward and set off of losses in case of companies.

“In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment,” it said.

Necessary legislative amendments for the above decision shall be proposed in due course of time, the statement said.

Commenting on clarification, Nangia Andersen LLP Head (Government and Public Sector Advisory) Suraj Nangia said “the Government has allowed that even after change in shareholding of such ailing PSUs due to transfer of shares in such PSUs by Government to strategic investors, past losses of such PSUs will be allowed to be carried forward for set off against future profits.”

This will make disinvestment deals of ailing PSUs more attractive for strategic investors, he said.

Under normal tax provisions, he said, without this relaxation, past losses of a company are not allowed to be set off, if there is change in majority shareholding of a company (i.e. 51 per cent).

“It may be noted that such relaxation will be available, only till the strategic investor retains at least 51 per cent in the PSU after takeover. In case the strategic investor’s shareholding falls below 51 per cent, such relaxation will be withdrawn,” he added.

The ambitious divestment pipeline also includes loss making national carrier Air India for which the deadline for submission of financial bids is September 15.

The government will be selling budget airline Air India Express and Air India’s 50 per cent stake in Air India SATS Airport Services Private Limited (AISATS) besides offloading its entire stake in loss-making Air India.

The deadline for submission of Expressions of Interest (EoI) or preliminary bids was extended five times earlier before closing it in December last year.

Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 that deals with amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies and carry forward of losses in case of change in shareholding following sale by the government.

The Centre budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in the current fiscal year.

As part of the privatisation strategy, the government aims to complete the strategic sale of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India, among others, by March 2022.

So far this financial year, Rs 8,368 crore has been mopped up through minority stake sales in PSUs and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

CBDT, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


In order to make disinvestment deals of ailing state-owned firms more attractive for strategic investors, the government on Friday allowed erstwhile public sector companies to carry forward losses to be set off against future profits. The Central Board of Direct Taxes (CBDT) in a clarification said that Section 79 of the Income Tax Act shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment.

“Accordingly, loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company,” the CBDT under the Finance Ministry said in a statement

The relaxation, it added, will cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold 51 per cent of the voting power of the erstwhile company.

Section 79 of the Income Tax Act deals with carry forward and set off of losses in case of companies.

“In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment,” it said.

Necessary legislative amendments for the above decision shall be proposed in due course of time, the statement said.

Commenting on clarification, Nangia Andersen LLP Head (Government and Public Sector Advisory) Suraj Nangia said “the Government has allowed that even after change in shareholding of such ailing PSUs due to transfer of shares in such PSUs by Government to strategic investors, past losses of such PSUs will be allowed to be carried forward for set off against future profits.”

This will make disinvestment deals of ailing PSUs more attractive for strategic investors, he said.

Under normal tax provisions, he said, without this relaxation, past losses of a company are not allowed to be set off, if there is change in majority shareholding of a company (i.e. 51 per cent).

“It may be noted that such relaxation will be available, only till the strategic investor retains at least 51 per cent in the PSU after takeover. In case the strategic investor’s shareholding falls below 51 per cent, such relaxation will be withdrawn,” he added.

The ambitious divestment pipeline also includes loss making national carrier Air India for which the deadline for submission of financial bids is September 15.

The government will be selling budget airline Air India Express and Air India’s 50 per cent stake in Air India SATS Airport Services Private Limited (AISATS) besides offloading its entire stake in loss-making Air India.

The deadline for submission of Expressions of Interest (EoI) or preliminary bids was extended five times earlier before closing it in December last year.

Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 that deals with amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies and carry forward of losses in case of change in shareholding following sale by the government.

The Centre budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in the current fiscal year.

As part of the privatisation strategy, the government aims to complete the strategic sale of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corp, Container Corporation, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India, among others, by March 2022.

So far this financial year, Rs 8,368 crore has been mopped up through minority stake sales in PSUs and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

CBDT extends due dates for electronic filing of various forms

Banking & Finance

[ad_1]

Read More/Less


With technical glitches in the new Income Tax portal remaining unresolved, the Central Board of Direct Taxes (CBDT) has extended the due date for the filing of certain electronic forms including one relating to Equalization Levy statement, and the form for declaration received from senior citizen account holder among others. These forms are to be filed electronically.

Extensions on forms

According to the board, the Equalization Levy Statement in Form No.1 for the FY21 can now be filed on or before December 30. Earlier, this date was extended to August 31 from June 30.

Banks will have till November 30 to upload declarations received from recipients in Form No.15G/15H during the quarter ended June 30. Earlier the date was extended to August 31.

Normally these declarations are submitted by a senior citizen who does not have PAN to get income tax benefits. Similarly declarations submitted during July-September quarter can now be uploaded on or before December 31.

The application for registration or approval under Section 10(23C), 12A or 80G of the Act in Form No.10AB will now have to be filed on or before March 31 of the next year. These sections help in getting exemption on contributions made to educational institution or charitable institution.

Also see: IT and IT

The Quarterly statement in Form No.15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on June 30 may be furnished on or before November 30. Intimation to be made by Sovereign Wealth Fund in respect of investments made by it in India in Form II SWF for the quarter ending on June 30 may be made on or before 30th November. The same will be applicable for overseas pension fund.

Intimation by a constituent entity, resident in India, of an international group, the parent entity of which is not resident in India for the purpose of compliance of tax law can now be made on or before December 31. The same date is applicable for a report by a parent entity or an alternate reporting entity or any other constituent entity, resident in India, and for intimation on behalf of an international group.

Vivad Se Viswas

CBDT also announced giving more time for payment of the amount (without any additional amount) under Vivad se Viswas scheme.

According to the board, considering the difficulties faced in issuing and amending Form No.3, a prerequisite for making payment by the declarant under Vivad se Vishwas Act, it has been decided to extend the last date of payment of the amount (without any additional amount) to September 30. Earlier the date was extended to August 31.

It is however clarified that there is no proposal to change the last date for payment of the amount (with additional amount) under the act, which remains as October 31.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Cryptos put India’s richie rich in a catch-22 situation, legality of transaction may be questioned, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


It’s a Catch-22 situation for wealthy Indians who bought Bitcoins from overseas markets and held them in offshore wallets as the fate of cryptos hangs in limbo in India. They are now in a quandary over how to account for, and whether to disclose, these ‘digital assets’.

If they hide these investments from the taxman, they may be pulled up later. But if they share the information while filing their annual income tax returns, they may be questioned on the legality of transactions they undertook. Some have acquired Bitcoins and other popular crypto currencies from international sellers by transferring funds from India under the Reserve Bank of India’s liberalised remittance scheme (LRS) which allows a resident to invest up to $250,000 a year abroad in stocks, bonds and properties among other things.

Others have purchased cryptos online from foreign sellers using their debit and credit cards. But there are question marks whether the LRS route and bank cards can be used to buy cryptos abroad. Bankers who remit LRS money say the facility cannot be used for direct purchase of Bitcoins from India as it does not figure in the permissible list of capital account transactions.

It’s one thing to subscribe to Coinbase IPO, but it’s another thing to buy Bitcoins directly. At least, that’s the impression they gather in their interactions with RBI.

But what if a person avails the LRS window to open a dollar or Euro account with a bank overseas and subsequently uses the money to buy Bitcoins abroad? Well, it’s none of our business, the bankers say. But is it beyond RBI’s jurisdiction as well? A RBI spokesman declined to comment on whether one can invest in cryptos under LRS. The use of debit or credit cards is done under the pretext that trades in cryptos are ‘current account’ (not capital account) transactions—a stand that can be challenged.

“While there is no specific provision dealing with purchase of Bitcoins under the LRS and while RBI has not specifically banned crypto currencies in India, there remains ambiguity whether individuals would be permitted to purchase the same. Further, in the absence of clarity on whether crypto currencies amount to “currencies” or merely a “contract / digital asset” in the hands of the recipient, it would be difficult to classify the same for reporting under the LRS since the fields provided for reporting under the form do not provide for such a disclosure,” said Tushar Ajinkya, founder and managing partner, ThinkLaw. However, according to Jaideep Reddy, leader (technology law) at Nishith Desai Associates, the RBI has not clarified the treatment of crypto-assets under FEMA but has stated that they do not amount to currency.

“They could hence be treated as intangible assets like intellectual property or software. Import of an intangible asset is permitted as a current account transaction. However, every transaction has to be analysed according to its specific facts and context,” said Reddy. Even as ambiguity prevails on the use of LRS, investors are now grappling with the dilemma over disclosure. Resident Indians are required to mention details of foreign bank accounts (including accounts in which they are signing authorities), immovable properties, or other assets located outside the country.

Here, the question that crops up is: should resident Indians disclose their overseas crypto holdings while filing returns for the assessment year 2021-22? A spokesperson for the direct tax body CBDT refused to comment while the professional accounting body ICAI had no views to share on the subject. Some of the tax professionals have told their clients to avoid cryptos while investing under LRS. “We believe RBI does not allow the use of LRS for purchase of crypto currencies as these are not in the list of permitted securities specified for purchase under LRS. However, no action has been taken by RBI till now as it may not have collected the data,” said Rajesh P Shah, who heads the research committee of The Chamber of tax Consultants.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Here’s a ready reckoner on changes in new ITR forms

Personal Finance

[ad_1]

Read More/Less


Last week, the CBDT notified the new ITR forms for assessment year 2021-22. Tax payers can breathe easy this year, given the limited changes in the tax forms. The changes this year are only with respect to certain amendments in the tax law, proposed in the Budget of 2020.

Besides, certain schedules introduced last year to accommodate the relief given to taxpayers during the pandemic have now been removed. For instance, Schedule DI (Detail of Investments/deposit/payment for the purpose of claiming deduction) finds no place in the new ITRs.

Here is a low-down on a few important changes in the new ITR forms, that can come in handy while filing your returns for assessment year 2021-22.

Eligibility tweaks

The exclusion list of ITR-1, that is, persons who cannot file their returns using ITR-1 has got some new frills this year. Now, taxpayers for whom TDS has been deducted under section 194N can no longer file their returns in ITR-1. Per the section, banks (including co-operative societies and post office) are required to deduct TDS at the rate of 2 per cent on cash withdrawals exceeding Rs 1 crore (in aggregate) in the previous year. For non-filers of income tax returns (i.e. those who did not file returns in all of the last three assessment years), the deduction shall be 2 per cent for amounts exceeding ₹20 lakh or at the rate of 5 per cent if withdrawals exceed Rs 1 crore.

In addition, following the recent amendments to tax law, employees who can defer their tax liability on ESOPs cannot file returns in ITR 1 or 4. They have to file returns in forms 2 and 3 only.

ESOP taxation

The Budget of 2020 proposed deferring the tax on ESOPs allotted for employees of a narrow stream of eligible start-ups. ESOPs are taxed twice, in the hands of the recipient employees – once at the time of receipt as a perquisite and next upon subsequent sale of the shares (Capital gains).

Employees of eligible start-ups can now defer the tax on perquisite by 48 months from the end of the relevant assessment year in which the shares are allotted. The Schedule TTI (Computation of tax liability on total income) now requires clear bifurcation of such current and deferred tax amount on ESOPs.

Dividend income

Another Budget amendment was the abolition of DDT and the consequential taxation of the same in the hands of the shareholders. In the ITR forms, apart from withdrawing the redundant mentions of the DDT sections, the Schedule OS (Income from Other Sources) has also been accordingly tweaked to accommodate these amendments. For example, a new row has been inserted to provide deduction for interest expenditure which can be claimed as a deduction under section 57(1) if incurred in relation to dividend income. Further new rows have been added to incorporate dividends earned by non-resident taxpayers, that are chargeable at special rates, under section 115A.

ITR Forms 2, 3 and 4 required taxpayers to provide quarterly break up of dividend income, which helps in computing the interest liability according to advance tax provisions. This break up is now also required to be furnished by taxpayers filing returns using ITR-1.

Concessional tax rates

Starting AY 2021-22, taxpayers can opt for lower tax regime under section 115BAC, by foregoing certain exemptions and deductions. In Part A of all the ITR Forms, taxpayers are required to specify if they are opting for new tax regime under section 115BAC. Assessees with income from business or profession were required to exercise such option on or before the due date for furnishing the returns by filing Form 10-IE. ITR Form-3 hence requires such taxpayers, to furnish the date of filing form 10-IE and its acknowledgement number.

Besides, consequential amendments, with respect to exemptions and deductions foregone have also been made. For instance, in ITR 3, amendments have been made in Schedule DPM (Depreciation on Plant and Machinery) and Schedule UD (Unabsorbed Depreciation), to make one -time adjustment in the written down value of the plant and machinery, for the exemptions now foregone.

New utility

In a bid to ease the burden of taxpayers when filing the returns, the CBDT has launched a new offline utility called JASON for the assessment year 2021-22. The existing excel and java utility have been discontinued. The new JSON utility has currently been enabled for ITR 1and 4 only.

The utility will import and pre-fill the data from e-filing portal to the extent possible. It is enough if taxpayers fill the balance data. However, facility to upload ITR at the e-filing portal using the utility is not yet enabled. It is expected to be available sooner than later.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , ,

Stuck in India due to Covid ? Know your tax liability

Personal Finance

[ad_1]

Read More/Less


Doubts regarding the residency status of those who are stuck in India during FY21 were expected to be clarified in the Budget. But the Budget was silent on the issue. The Central Board of Direct Taxes (CBDT) has now come out with a circular on this. The long-awaited circular has not changed conditions for determining the residential status, but it has reiterated that the possibility of double taxation is low. If you have been stranded in India and working out of home, here’s what you need to know:

What are the existing rules applicable to determine the residential status as per the Income Tax Act?

As per the current income tax provisions, an Indian citizen or a person of Indian origin (PIO) whose Indian income does not exceed ₹15 lakh per annum becomes a resident of India if she/he stays at least 182 days in the country in a financial year. If the Indian income of such a person exceeds ₹15 lakh, she/he attains residency in India if a) stays in India for 182 days or more in a financial year, or b) stays for 120 days or more in the relevant financial year and also stays for 365 days or more in preceding four previous years.

If the person is a not a citizen of India or a PIO, then the 120 days in the second scenario above will be replaced with 60 days.

Note that these rules are applicable from FY21. The residential status rules applicable for FY20 were tweaked to provide some relief to taxpayers by excluding the period of stay in India from March 22, 2020 to March 31, 2020 for the purposes of determining the residential status if the taxpayer was not able to leave India during that period.

What are the instances wherein one may become the resident of India for the reason of being stranded in the country due to Covid-19?

There could be two main instances wherein an individual may become a resident in India in FY21 (on the back of exceptional situations) due to which income earned may become taxable both in India and abroad.

One, a person of Indian origin working abroad who acquired residence status there but temporarily returned to India because of Covid-19 situation. He may become a resident in India while retaining the residency status of the other country in which she/he is working.

Two, a non-resident visitor to India (perhaps on a holiday or to work for a few weeks) gets stranded here due to the pandemic and attains the resident status here. It is also relevant to note that even in cases wherein an individual became resident in India, he would most likely become not ordinarily resident in India and hence his foreign sourced income shall not be taxable in India unless it is derived from a business controlled in or a profession set up in India.

Does the CBDT circular provide relief on the residency conditions for FY21 to those stranded in the country?

There is no relief provided in terms of period of stay for FY21 for the purpose of residential status. The circular just states that NRIs and foreign nationals stuck in India due to Covid-19 pandemic and facing double taxation in FY21 can submit the details to the income-tax department by March 31.

The circular tries to allay the fear of double taxation — taxability both in abroad and in India – of an income. It says the possibility of double taxation doesn’t exist as per the provisions of Income Tax Act, read with the DTAA (Double Taxation Avoidance Agreement) with each country.

In spite of that, if a particular tax payer suffers from double taxation due to forced stay in India despite complying with the rules in DTAA, he/she shall provide such information online to the Income Tax Department in Form NR annexed with CBDT circular by March 31, 2021 (https://tinyurl.com/taxres21). After examining the case, the tax department decides if any relaxation is required to be given in that case.

Does it mean that you have to worry about taxes if you have worked from India in FY21 for a company incorporated outside the country ?

There is no a straight forward answer. It is possible that a person is stranded in India due to Covid-19 but continued to earn income from the employer abroad by working from home. According to Mukesh Kumar, Director at M2K Advisors, salary earned by an employee for services rendered in India is taxable in India, irrespective of whether the employee is a resident or non-resident.

However, in case of foreign citizens, remuneration received from a foreign entity is exempt if the foreign entity is not engaged in any business in India, the stay of the employee does not exceed certain number of days (say, 183 days as per the India-USA DTAA) in the financial year and such remuneration is not claimed as deduction in India. However, to claim the tax treaty benefit, the employee should obtain tax residency certificate from the other country. However, experts say that obtaining a tax certificate from other country, sometimes, could be a time-consuming and a costly affair.

So, if your income becomes taxable in India, will you get the tax credit if the taxes are already paid on that income abroad?

A resident person in India is entitled to claim credit of the taxes paid in any other country in accordance with the rule 128 of the Income Tax Rules, 1962. This can be done by submitting the withholding tax certificate from the other country or any other supporting document evidencing payment of tax in the other country along with the return of income in India in Form 67. Having said that, if the tax rates in the country in which taxes are already paid are lower than the applicable tax rates in India, the assessee will be liable to pay the balance amount.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,