Cross border transactions can create tax obligations in more than one country. International Tax Advisors & Consultants assist businesses, investors, multinational groups, expatriates and internationally mobile individuals in understanding Indian tax exposure alongside foreign tax obligations. The analysis can involve tax residence, Double Taxation Avoidance Agreements, permanent establishment, foreign income, withholding tax, transfer pricing, foreign tax credits and cross border investments.
India's international tax framework is based on domestic tax legislation together with bilateral tax treaties and related rules. For tax years beginning on or after 1 April 2026, the Income-tax Act, 2025 applies. Section 159 provides the statutory framework for agreements with foreign countries and specified territories for relief from double taxation. International taxation is therefore not limited to determining the tax rate applicable to a foreign payment. The legal character of the income, residence of the taxpayer, location of the underlying activity, treaty provisions, commercial substance and documentation can all affect the result.
Understanding International Taxation in India
International taxation concerns transactions, income and business activities involving more than one jurisdiction. An Indian company paying royalties to an overseas group company may face withholding tax and transfer pricing considerations. A foreign company providing services to customers in India may need to assess whether it has a taxable presence in India. An Indian resident receiving overseas dividends or salary may need to consider Indian taxation and foreign tax credit. Each situation requires a separate analysis. The starting point should be the domestic law of the relevant countries. The applicable tax treaty is then considered to determine whether it modifies the taxing rights otherwise available under domestic law.
India's International Tax Framework
The Indian framework combines domestic income tax provisions, tax treaties, rules and administrative guidance. For tax years governed by the Income-tax Act, 2025, Section 159 provides for agreements with foreign countries or specified territories for purposes including relief from double taxation and exchange of information. Earlier tax years continue to be governed by the Income-tax Act, 1961 and the provisions applicable to those years. This transition is relevant for businesses dealing with historical assessments, ongoing litigation, withholding obligations and cross border transactions spanning different tax years.
International Tax Advisors and Indian Domestic Law
A tax treaty does not operate independently of Indian domestic law. The taxpayer must first establish the Indian domestic tax position. The relevant treaty is then examined to determine whether India has a taxing right and whether the treaty limits that right. For example, a payment to a foreign enterprise may appear taxable under domestic law. However, the applicable DTAA may restrict India's taxing rights if the treaty conditions are satisfied. This distinction is fundamental to international tax analysis.
Double Taxation Avoidance Agreements in India
India has entered into DTAAs with numerous countries to address double taxation and promote cross border economic activity. A DTAA can allocate taxing rights over different categories of income, including business profits, dividends, interest, royalties, fees for technical services, employment income and capital gains. The applicable article depends on the nature of the income and the circumstances of the taxpayer. A treaty should therefore be analysed provision by provision rather than relying on a general assumption that a foreign payment is taxable or exempt.
DTAA Benefits and Treaty Entitlement
A taxpayer seeking treaty relief must establish eligibility under the applicable treaty. For non-residents, the Income Tax Department states that a Tax Residency Certificate is relevant to claiming treaty relief, along with the prescribed information requirements such as Form 10F where applicable. The taxpayer should also examine the beneficial ownership, limitation provisions and other conditions contained in the relevant treaty and Indian law. Treaty relief should be supported by appropriate documentation and a defensible factual position.
Tax Residency and International Tax
Tax residence is one of the first questions in a cross-border tax analysis. An individual can change tax residence by moving between countries. A company can also face residence questions where its management and operations span jurisdictions. Residence determines the scope of taxation in many domestic systems and can also determine which treaty provisions apply. For individuals, the Indian residence rules focus on statutory tests concerning physical presence and other prescribed circumstances. For companies and other entities, residence may depend on incorporation and management related factors under the applicable law.
Tax Residency Conflicts Between Countries
Two countries can sometimes regard the same individual or company as tax resident under their domestic laws. The relevant DTAA may contain tie breaker rules to determine treaty residence. For individuals, these rules can consider factors such as a permanent home, centre of vital interests, habitual abode and nationality, depending on the wording of the treaty. For companies, the treaty may contain provisions concerning the place of effective management or require the competent authorities to determine residence. The treaty wording must be examined carefully because these provisions vary between agreements.
International Tax Advisors for Foreign Income
A tax advisor for foreign income can help Indian residents understand the taxation of income arising outside India. Foreign salary, dividends, interest, rental income, capital gains and business income may have different tax treatment. The taxpayer's Indian residential status is particularly important. A Resident and Ordinarily Resident may generally face Indian taxation on worldwide income, subject to applicable relief. A non-resident has a narrower Indian tax base. RNOR status can also affect the treatment of certain foreign income.
Foreign Tax Credit in India
Foreign tax credit can help prevent the same income from being taxed twice. For taxpayers covered by the relevant provisions, foreign tax paid overseas may be available as a credit against Indian tax subject to statutory conditions. The Income Tax Department's current guidance states that Rule 128 of the Income Tax Rules, 1962 governs foreign tax credit claims and requires the taxpayer to furnish the prescribed information through Form 67 within the specified timeline. The new Income-tax Act, 2025 also contains provisions dealing with relief for foreign income where no applicable agreement exists. Section 160 provides relief in specified circumstances where foreign tax has been paid in a country with which India has no agreement for double taxation relief.
Form 67 and Foreign Tax Credit
Form 67 is an important compliance requirement for taxpayers claiming foreign tax credit under the existing framework. The Income Tax Department requires the form to be submitted electronically and provides for details concerning foreign income, foreign tax paid and the credit claimed. Supporting evidence of foreign tax paid or deducted may also be required. Foreign tax credit should therefore be reviewed before filing the Indian income tax return. Differences in income classification, exchange rates, tax periods and foreign tax documents can affect the credit computation.
Cross Border Tax Advisory for Businesses
Cross border tax advisory is relevant whenever a business earns income, incurs expenses, invests or establishes operations across national borders. A business entering India may need to consider permanent establishment, withholding tax, transfer pricing and corporate residence. An Indian business expanding overseas may need to assess foreign corporate tax, withholding, local registration, permanent establishment and the interaction between Indian and foreign tax systems. The commercial structure should be assessed before the transaction is implemented.
Permanent Establishment in India
Permanent establishment is a central concept in international corporate taxation. A foreign enterprise may have a taxable presence in India depending on its activities and the provisions of the applicable DTAA. A fixed place of business, construction activity, dependent agent or other business arrangement can potentially become relevant, depending on the treaty wording. The mere existence of an Indian customer does not automatically create a permanent establishment. The actual functions performed in India, contractual authority, duration of activities and commercial arrangements must be considered.
Permanent Establishment and Employees
Employees working in India can become relevant to a foreign company's permanent establishment analysis. This does not mean every employee working from India creates a PE. The legal assessment depends on the employee's functions, authority, location, contractual role and the applicable treaty. A foreign company employing personnel in India should therefore assess PE exposure before adopting a working arrangement.
Business Connection and Indian Taxation
Domestic Indian tax law may create taxing rights even where a treaty does not apply. The concept of business connection and other statutory source rules can become relevant to foreign enterprises earning Indian income. The relationship between domestic taxing provisions and treaty provisions should be examined carefully. A foreign company should not assume that the absence of a formal Indian subsidiary means it has no Indian tax exposure.
International Corporate Tax Advisory
International corporate tax advisory deals with the tax implications of operating across multiple jurisdictions. It can cover holding company structures, subsidiaries, branches, financing arrangements, intellectual property, cross border services, acquisitions and business reorganisations. The analysis should consider both Indian tax and the tax laws of the other jurisdictions involved. A structure which appears efficient under Indian law may create additional tax in another country.
Cross Border Corporate Structures
Businesses expanding internationally may choose between subsidiaries, branches, partnerships, representative arrangements or other structures. The choice can affect tax residence, permanent establishment, withholding, transfer pricing and repatriation. The commercial purpose of the structure should be documented. A structure without sufficient commercial substance can attract scrutiny, particularly where treaty benefits or related party transactions are involved.
International Tax Planning
International tax planning involves arranging genuine commercial activities in a manner consistent with applicable law. It can include reviewing the location of operations, financing, intellectual property ownership, investment structures and repatriation methods. Tax planning must be distinguished from aggressive arrangements designed primarily to obtain an artificial tax benefit. Indian law contains anti-avoidance provisions, including the General Anti Avoidance Rule framework for applicable arrangements. Treaty entitlement should therefore be supported by commercial substance and proper documentation.
Treaty Shopping and Beneficial Ownership
Treaty benefits are not intended to provide an unrestricted route to reduced taxation. Where a company is inserted between two jurisdictions primarily to obtain treaty benefits, the arrangement may attract scrutiny. Beneficial ownership can also become relevant for certain categories of income, particularly dividends, interest and royalties. The actual economic role of the recipient should therefore be considered when assessing treaty relief.
Withholding Tax on Cross Border Payments
Indian businesses making payments to non-residents may have withholding tax obligations. Common payment categories include interest, royalties, fees for technical services, commission, professional services and other income potentially chargeable to tax in India. The rate can depend on domestic law and the applicable DTAA. The Income Tax Department publishes comparative information showing that certain payments to non-residents may be taxable under the Income-tax Act or relevant treaty, with treaty provisions potentially producing a more beneficial result where the statutory conditions are met. The correct withholding position should be established before payment rather than corrected afterwards.
Withholding Tax Certificates and Documentation
Cross border payments require proper documentation. The payer may need to obtain or maintain information concerning the recipient's tax residence, treaty eligibility, nature of services and contractual arrangement. A Tax Residency Certificate and prescribed declarations may be relevant to treaty claims. The documentation should correspond with the actual transaction. A treaty claim unsupported by adequate evidence can become difficult to defend during an assessment.
International Tax and Transfer Pricing
Cross border transactions between associated enterprises can trigger transfer pricing requirements. Transactions may include the purchase or sale of goods, provision of services, royalties, financing, guarantees, cost allocations and intellectual property arrangements. The arm's length principle is central to the Indian transfer pricing framework. A transfer pricing analysis should also consider whether the transaction creates withholding tax, permanent establishment or treaty issues. The tax treatment of an intercompany transaction should be considered across all relevant tax regimes.
International Tax and Intellectual Property
Intellectual property is often central to multinational business structures. Indian companies may pay royalties or fees for technical services to overseas group companies. Indian businesses may also license intellectual property to foreign customers. The tax treatment can depend on the nature of the rights granted, the applicable treaty, the place of use, the recipient's residence and the contractual structure. Transfer pricing and withholding tax should be considered alongside the commercial IP arrangement.
International Tax and Cross Border Financing
Loans between related companies can create interest income, withholding tax and transfer pricing issues. The financing terms should be commercially supportable. The tax analysis may cover interest rates, thin capitalisation considerations where applicable, treaty provisions and deductibility. Guarantees and other financial support can also require separate analysis.
International Tax for Foreign Companies Operating in India
Foreign companies operating in India may face tax exposure through subsidiaries, branches, project offices or other business arrangements. The first question is often whether the foreign enterprise has income taxable in India. The second is whether the applicable DTAA limits India's taxing rights. Where a permanent establishment exists, the next issue may be the attribution of profits to Indian activities. The factual analysis is therefore as important as the statutory provisions.
International Tax for Indian Companies Expanding Overseas
Indian companies establishing operations overseas should review the tax rules of the destination country before committing capital. Potential issues include corporate residence, permanent establishment, local withholding, foreign payroll, indirect taxes and repatriation. The Indian tax consequences should also be considered. A foreign subsidiary can create reporting and transfer pricing obligations even where the parent company remains resident in India.
International Tax for Multinational Groups
Multinational groups often have multiple entities, supply chains and intercompany agreements. The tax position should be consistent across the group's legal and accounting records. Differences between transfer pricing documentation, customs valuation, financial statements and tax returns can create avoidable risk. Group tax policies should therefore be reviewed against actual business operations.
International Tax and Cross Border M&A
International acquisitions require tax due diligence in both the target and buyer jurisdictions. A buyer should examine historical tax liabilities, permanent establishment exposure, withholding obligations, transfer pricing, treaty claims and outstanding tax disputes. The transaction structure can also affect capital gains, withholding and post-acquisition taxation. Share acquisitions and asset acquisitions can produce materially different tax outcomes.
International Tax Due Diligence
Tax due diligence can identify exposures which may not be obvious from audited financial statements. The review can include tax returns, assessments, withholding, transfer pricing, cross border payments, treaty claims, foreign tax credits and tax litigation. For an international acquisition, the review should extend to the jurisdictions where the target has subsidiaries, employees, customers or significant assets. The findings may affect valuation, warranties, indemnities and transaction structure.
International Tax and Expatriate Employees
International assignments can create tax obligations for both employees and employers. An employee moving to India may become an Indian tax resident. An Indian employee working overseas may become resident in another jurisdiction. Salary, bonuses, stock awards, housing and employer borne taxes may require separate analysis. The employer should also assess payroll withholding and possible permanent establishment implications.
International Tax for NRIs and Returning Indians
Indian citizens living overseas can face tax obligations in India depending on their residential status and Indian source income. Rental income, capital gains from Indian property, dividends and interest can have Indian tax consequences. Returning Indians should also review their overseas investments and foreign income before becoming resident in India. RNOR status may be relevant depending on the individual's circumstances.
International Tax for High-Net-Worth Individuals
High net worth individuals often have assets in several jurisdictions. These can include overseas bank accounts, securities, trusts, companies, real estate, pensions and private investments. The Indian tax analysis may involve residence, foreign asset reporting, foreign income and foreign tax credits. Estate and succession considerations can also interact with the tax position. The analysis should therefore consider the individual's wider international asset structure.
International Tax and Foreign Assets
Indian residents may have reporting obligations relating to foreign assets and foreign income. The precise obligations depend on residential status, the nature of the asset and the applicable return and statutory requirements. Overseas accounts, shares, financial interests and directorships should not be omitted simply because the income was not remitted to India. Foreign asset reporting should be reviewed before filing the Indian return.
International Tax and Capital Gains
Cross border capital gains can involve multiple taxing jurisdictions. For example, the sale of shares in an Indian company by a foreign investor may raise Indian tax issues and tax consequences in the investor's home jurisdiction. The relevant DTAA may contain a specific capital gains article. The analysis should consider the asset, seller's residence, nature of the transaction and treaty wording.
International Tax and Digital Businesses
Digital businesses can operate across borders without maintaining a traditional physical office. This creates difficult questions concerning source, permanent establishment, significant economic activity and withholding. The international tax treatment can depend on the nature of the digital service, customer location, contractual arrangements and applicable domestic law and treaty. Technology companies should therefore assess international tax exposure as they enter new markets.
International Tax for Technology and Software Companies
Software licensing, cloud services, SaaS arrangements, technical support and digital advertising can produce different tax outcomes. Payments to foreign technology providers may require analysis of royalty or fees for technical services provisions. The classification of software payments can also depend on the rights granted under the agreement. A contract should therefore be reviewed before determining the withholding position.
International Tax for Financial Services
Banks, NBFCs, fintech companies, investment funds and financial institutions often operate through complex cross border structures. Interest, management fees, guarantees, derivatives and investment income can create international tax considerations. Regulatory requirements may also overlap with tax rules. The relevant tax treaty and domestic provisions should be considered alongside sector specific regulations.
International Tax for Pharmaceuticals and Life Sciences
Pharmaceutical and life sciences businesses commonly enter into international licensing, research, manufacturing and distribution arrangements. Payments can include royalties, technical fees, research costs and service charges. Transfer pricing, withholding tax and intellectual property taxation can therefore become important. The commercial substance of the arrangement should be reflected in the agreements and supporting records.
International Tax for Manufacturing and Engineering
Manufacturers often operate through global supply chains. Imports, exports, intercompany purchases, technical services, royalties and financing can all create tax issues. Customs valuation and transfer pricing may also apply to the same transaction under separate legal regimes. A coordinated review can reduce inconsistencies between the company's customs and income tax positions.
International Tax for Infrastructure, Energy and Construction
Infrastructure and construction projects can create permanent establishment and source taxation questions. The duration and nature of project activities can be important under the applicable treaty. Engineering services, equipment supplies, financing and technical assistance may also require separate withholding analysis. Project contracts should therefore be reviewed from an international tax perspective before execution.
International Tax Across Major Industries
International tax issues arise across technology, software, IT services, fintech, banking, financial services, pharmaceuticals, healthcare, life sciences, medical devices, biotechnology, manufacturing, automotive, engineering, chemicals, petrochemicals, oil and gas, renewable energy, infrastructure, construction, real estate, telecommunications, aviation, shipping, logistics, food and beverage, agriculture, textiles, apparel, retail, e commerce, consumer goods, media, entertainment, sports, hospitality, tourism, education, mining, metals, jewellery and professional services. The relevant tax treatment depends on the transaction, structure and jurisdictions involved rather than the industry alone.
International Tax and GST
Cross border transactions can involve both direct and indirect taxes. Imported goods may attract customs duties and IGST. Cross border services can raise questions concerning place of supply, export treatment, input tax credit and reverse charge. The income tax treatment should therefore be reviewed alongside GST where the transaction involves international services or goods.
International Tax and Corporate Tax Compliance
International transactions form an important part of wider corporate tax compliance. Companies should maintain consistent records for cross border payments, transfer pricing, withholding, tax returns and financial statements. A transaction reported as a service payment for withholding purposes should not be described inconsistently in another statutory filing.
Strong documentation begins with the commercial contract and continues through invoicing, payment and tax reporting.
International Tax and FEMA
Cross border transactions involving India can also fall within the Foreign Exchange Management Act, 1999. Foreign investment, overseas investment, loans, guarantees, repatriation and certain transfers of securities can require FEMA analysis. Tax compliance and FEMA compliance are separate. A transaction can be valid for tax purposes but require additional foreign exchange approvals or reporting. Both regimes should therefore be reviewed where capital or funds cross borders.
International Tax and Customs
Import transactions can create both customs and income tax consequences. The customs authorities may examine the value of imported goods, while income tax authorities may examine transfer pricing for related party transactions. The two regimes apply different statutory tests. Businesses should therefore avoid treating the customs value and transfer pricing value as automatically interchangeable.
Global Tax Consultants for International Businesses
Global tax consultants assist businesses with tax issues spanning several jurisdictions. Their work may include tax residence, treaty analysis, withholding, permanent establishment, transfer pricing and international restructuring. For an Indian business, global advice should still be grounded in Indian domestic law and the specific tax treaty involved.
International Tax Advisors for Cross Border Transactions
International tax advisors may assist with transactions involving foreign investors, overseas subsidiaries, international service arrangements and cross border financing. The value of the advice lies in identifying how different tax systems interact. A transaction should be assessed from both the Indian and foreign perspectives before implementation.
International Tax Consultants and Overseas Tax Advisors
International tax consultants can help businesses and individuals assess the tax consequences of foreign income and cross border transactions. For Indian residents with overseas assets, overseas tax advisors may also need to coordinate with advisers in the foreign jurisdiction. The objective should be a consistent tax position across jurisdictions.
Foreign Tax Consultant and Foreign Tax Advisors
A foreign tax consultant may be required where an Indian taxpayer has income or assets in another country. Similarly, foreign tax advisors can assist with the local tax position in the overseas jurisdiction. Where two advisers are involved, their advice should be coordinated rather than prepared independently.
Cross Border Tax Consultants
Cross border tax consultants typically deal with transactions involving more than one country's tax system. Issues can include withholding, residence, treaty benefits, foreign tax credits, permanent establishment and transfer pricing. The correct approach depends on the jurisdictions and transaction involved.
International Tax Advisory Services
International tax advisory services can cover tax treaty interpretation, international structuring, cross border transactions, foreign income, tax residence and dispute resolution. The scope should be tailored to the taxpayer's circumstances. A straightforward overseas investment may require limited treaty analysis, while a multinational restructuring may require a detailed review across several jurisdictions.
International Tax Consulting Firms
Businesses may encounter several types of international tax consulting firms. Some focus on compliance. Others specialise in transaction structuring, transfer pricing, disputes or private client taxation. For complex Indian matters, the adviser should have a sound understanding of Indian tax legislation, treaty interpretation and Indian tax litigation.
Global Tax Advisory Services
Global tax advisory services can support businesses with international expansion and multinational operations. The work may involve reviewing holding structures, financing, intellectual property, supply chains and repatriation. Tax considerations should be integrated with the commercial and legal structure of the business.
Global Tax Consultancy
Global tax consultancy is particularly relevant to companies operating in multiple countries. The analysis may involve several local advisers. A central tax strategy can help ensure that the group's positions remain consistent while respecting each jurisdiction's domestic requirements.
International Tax Consulting Services
International tax consulting services can include tax health checks, transaction reviews, treaty analysis, foreign tax credit assessments and cross border compliance. For businesses, the service may be combined with transfer pricing and corporate tax advice. For individuals, it may focus on foreign income, residence, investments and tax return obligations.
International Tax Disputes
International tax disputes can arise where two countries seek to tax the same income. A taxpayer may also challenge a domestic tax authority's interpretation of a treaty. Available remedies can include domestic appeals and, where applicable, the Mutual Agreement Procedure under the relevant tax treaty. The correct route depends on the nature of the dispute and the applicable treaty.
Mutual Agreement Procedure
The Mutual Agreement Procedure can provide a mechanism for resolving certain cases of taxation inconsistent with a tax treaty. It involves the competent authorities of the relevant jurisdictions. MAP should not be treated as an alternative to every domestic appeal. The appropriate strategy depends on the dispute, treaty wording and available domestic remedies.
International Tax Litigation in India
International tax disputes may proceed through the Indian tax appellate system. Depending on the matter, proceedings can involve the Assessing Officer, Commissioner of Income Tax (Appeals), Dispute Resolution Panel, Income Tax Appellate Tribunal, High Court and Supreme Court of India. Issues can include permanent establishment, treaty interpretation, transfer pricing, withholding tax, royalty classification and capital gains. A strong factual record is often critical in treaty disputes.
International Tax Legal Support for Cross Border Transactions
International tax analysis requires more than identifying the applicable tax rate. The taxpayer's residence, nature of income, commercial substance, contractual arrangements, location of activities and applicable treaty can all affect the final position. For Indian businesses, the analysis may also involve transfer pricing, withholding tax, GST, FEMA and corporate tax compliance. For individuals, foreign income, residential status, foreign assets and foreign tax credits may be central to the assessment.
The transition to the Income-tax Act, 2025 adds another consideration. Transactions and tax years falling within different statutory periods may need to be examined under different legislative provisions. Section 159 of the new Act provides the framework for India's agreements with foreign countries and specified territories for double taxation relief. SMV Chambers advises businesses, multinational groups, foreign companies, investors, expatriates and internationally mobile individuals on international taxation, DTAAs, cross border transactions, permanent establishment, withholding tax, transfer pricing, foreign tax credit, international structuring and tax disputes. The firm's international tax work can also be coordinated with related corporate, regulatory and cross border legal matters.
Frequently Asked Questions About International Taxation
Q1. What is international taxation?
International taxation concerns the tax treatment of income, transactions, investments and business activities involving more than one jurisdiction.
Q2. What do International Tax Advisors & Consultants do?
International Tax Advisors & Consultants analyse cross border tax exposure, treaty provisions, tax residence, withholding, permanent establishment, transfer pricing, foreign income and foreign tax credits.
Q3. What is a DTAA?
A Double Taxation Avoidance Agreement is a treaty between countries designed to address double taxation and allocate taxing rights over specified categories of income.
Q4. Does India have tax treaties with other countries?
Yes. India has entered into DTAAs with numerous countries and specified territories.
Q5. Can a taxpayer choose the DTAA over Indian domestic law?
Where the relevant treaty applies, Indian law generally provides for treaty provisions to apply in accordance with the statutory framework, including where the treaty provisions are more beneficial to the taxpayer. The precise position must be assessed for the relevant tax year and income.
Q6. What is a Tax Residency Certificate?
A Tax Residency Certificate is evidence issued by a foreign tax authority confirming tax residence. It can be relevant when a non resident seeks treaty benefits in India.
Q7. What is Form 10F?
Form 10F is used to provide prescribed information in connection with certain treaty claims by non residents. Its applicability should be assessed based on the relevant treaty and statutory requirements.
Q8. What is foreign tax credit?
Foreign tax credit allows eligible taxpayers to obtain relief for qualifying foreign taxes paid on income which is also subject to Indian tax, subject to the applicable rules and limitations.
Q9. Is Form 67 required for foreign tax credit?
Under the current framework, Form 67 is required for claiming foreign tax credit in the circumstances covered by Rule 128. The Income Tax Department requires the form to be submitted electronically within the prescribed timeline.
Q10. Can an Indian resident claim credit for tax paid overseas?
Potentially. The availability and amount of credit depend on the applicable Indian provisions, foreign tax paid, nature of income, treaty position and compliance with the prescribed requirements.
Q11. What happens if there is no DTAA with the foreign country?
Indian law can still provide relief from double taxation in specified circumstances. Section 160 of the Income-tax Act, 2025 addresses certain cases involving foreign income where no agreement for relief exists.
Q12. What is permanent establishment?
Permanent establishment is a treaty concept used to determine whether a foreign enterprise has a sufficient taxable business presence in another jurisdiction.
Q13. Does having Indian customers create a permanent establishment?
Not automatically. The answer depends on the business activities, contractual arrangements, physical presence, personnel and wording of the applicable treaty.
Q14. Is salary earned abroad taxable in India?
It depends primarily on the individual's residential status, the source and nature of the income and the applicable treaty provisions.
Q15. Is foreign income taxable for an NRI?
An NRI is generally subject to Indian tax on income falling within the Indian tax base. Foreign income may have different treatment depending on residential status and the source of the income.
Q16. What is international corporate tax advisory?
International corporate tax advisory deals with tax issues arising from multinational business structures, cross border transactions, foreign subsidiaries, branches, financing, intellectual property and international restructuring.
Q17. What is cross border tax advisory?
Cross border tax advisory concerns transactions and activities involving two or more jurisdictions. It can include treaty analysis, withholding, residence, permanent establishment and foreign tax credit.
Q18. What does a foreign tax consultant do?
A foreign tax consultant advises on tax issues arising in another jurisdiction, often in coordination with advisers familiar with the taxpayer's home country.
Q19. What are overseas tax advisors used for?
Overseas tax advisors can assist taxpayers with tax obligations in countries where they work, invest, own property or operate businesses.
Q20. Can international tax planning reduce tax legally?
Legitimate tax planning can help taxpayers structure genuine commercial transactions within the applicable law. Arrangements designed primarily to obtain artificial tax benefits may be subject to anti avoidance provisions.
Q21. What is treaty shopping?
Treaty shopping generally refers to structuring arrangements primarily to obtain treaty benefits which would not otherwise be available to the underlying taxpayer.
Q22. What is beneficial ownership in international taxation?
Beneficial ownership generally concerns whether the recipient of income has the substantive right to enjoy and control the income rather than merely receiving it for another person.
Q23. Can a foreign company be taxed in India without an Indian subsidiary?
Yes. A foreign company can potentially have Indian tax exposure through Indian source income, business connection or a permanent establishment, depending on domestic law and the applicable treaty.
Q24. Does transfer pricing apply to international transactions?
Yes, Indian transfer pricing rules can apply to specified international transactions between associated enterprises, subject to the statutory framework.
Q25. Does FEMA affect international tax planning?
FEMA is separate from income tax, but it can apply to foreign investment, overseas investment, loans, guarantees and other cross border transactions. Both regimes may need to be considered.
Q26. Can international tax disputes be resolved through MAP?
Potentially. The Mutual Agreement Procedure may be available where the applicable DTAA contains the relevant provision and the circumstances satisfy its requirements.