Download - Non Resident Taxation Sep 11
STEP i
Where he visits
Where he
resides
r e s o u r c e s
to enjoy common
It’s a fee a person pays
Where he transacts
Tax on Earnings
Tax on
Consumption
Direct Taxes
Indirect Taxes
With developments in
business and commerce
t a xe s h a v e e v o l v e d
NOT
Tax is
Consequent to a transaction
Determinant of a transaction
STEP I i
INCOMETAX ACT
1961
Sec115C to 115-I
Sec 90 / 91
Sec195
Sec 6 / 9
Resident
Stay of 182 days
Stay of 60 days
If Last 4 years stay of 365 days
Non resident
9 of 10 years
<729 days in 7 years
OR
Tax in India
On Income
ReceivedEarnedAccrued
20% on Gross Investment Income
Rate of TAX
Resident Individual rates
20%
Rate of TAX10%
40%
Special provisions…
Person of Indian Origin
Citizen Of India
Non Resident
Investment IncomeLTCG Specified Assets
Shares
Deposits
Debentures
Government Security
NO Return Of Income
Investment Income @20%
Long Term Capital Gains @10%No Indexation
Capital Gains in Fx
Option Of the assesseeYear – on – year basis
STEP I I i
International Trade
Where to Tax ?
Source Tax
Resident Tax
Resident of Two Countries
Taxation
DOUBLE
Judicial Double Taxation
Different Jurisdiction
Same IncomeSame Person
Economic Double Taxation
Different Jurisdiction
Same IncomeDifferent Person
do
NOTCREATE
Tax Treaties
they LIMIT exercise
Taxing Rights
Model Conventions
OECD
Developing
Countries
Residence
UNDevelo
ped Countri
es
Source
US
World Income
Judicial Double Taxation
Different Jurisdiction
Same IncomeSame Person
Economic Double Taxation
Different Jurisdiction
Same IncomeDifferent Person
Bilateral
Bridge that
connectsThe Domestic tax
laws Of 2 Countries
TAX TREATIE
S
Br o
ad
l y
7 Sections
Scope of Conventi
on
Definitions
Taxation of
Income
Taxation of Capital
Elimination of
Double Tax
Special provisions
Final provision
s
Scope
of
Convent
ion
Article 1: Applicability
Article 2: Taxes Covered
WHO ? WHAT ?
Definitio
ns
Article 3: General Terms
Article 4: Residence
Article 5: Permanent Establishment
WHO ?
Taxatio
n of
Income
Article 6 to 21: Types of Income
What ?
Taxatio
n of
Capital
Article 22:
What ?
Elimina
tion of
Double
Tax
Article 23: Tax Credits, etc
How ?
Special
provisio
ns
Article 24 to 29:
Where?
Final
provisio
ns
Article 30 - 31:
When ?
STEP I v
TAX CREDITS
Unilateral
Domestic Law
BilateralTax Treaties
• Full Credit• Ordinary Credit
Credit method
• Tax in one country onlyExemption Method
• Economic Double tax reliefUnderlying Tax Credit
• Deemed Tax CreditTax Sparing
• Full Credit
•Ordinary Credit
Credit method
HOW ….. Ordinary
Ordinary Credit
Item / Source
Category
Country
Worldwide
STEP v
TAX TREATIES
236 countries
204 sovereign
193 part of UN
85 Tax Agreements
3 Terminated
13 Limited
73 Comprehensiv
e
73 Comprehensiv
e
13 Limited
Afghanistan (1975)
Bulgaria (1977)
Czechoslovakia (1978)
Ethiopia (1976)
Iran (1973)Kuwait (1982)
Lebanon (1968) Pakistan (1988)
USSR (1976)
Saudi Arabia (1991)
UAE (1989)
Yamen Arab Republic (1986)
Peoples Democratic Republic of Yamen (1988)
3 Terminated
Pakistan (1947)
Union of Soviet Socialist Republic(1989)
Czechoslovakia (1986)
conclude
to
Income – Source OR Residence
Domestic Tax Laws
Special Provisions
Tax Treaties
Tax Credit in Home Country
FINALLY….
Abdulla PettiwalaCorporate Tax Team,
29-Sep-11