tag:blogger.com,1999:blog-91815762357395583362024-03-08T06:41:56.265-08:00Taxation of Foreign RemittancesCA Mohit Bansalhttp://www.blogger.com/profile/15695850788515210683noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-9181576235739558336.post-30416852477583126052018-03-15T23:28:00.001-07:002018-03-15T23:28:55.366-07:00Need for Tax Treaty (Class 1 of International Taxation) - CA Mohit Bansal<iframe allowfullscreen="" frameborder="0" height="270" src="https://www.youtube.com/embed/N2PVFgoIgyo" width="480"></iframe>CA Mohit Bansalhttp://www.blogger.com/profile/15695850788515210683noreply@blogger.com0tag:blogger.com,1999:blog-9181576235739558336.post-51795160027410046592016-10-09T10:46:00.002-07:002016-10-09T10:51:58.692-07:00Remittances for Director Fees & Remuneration<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "georgia" , "serif"; font-size: 16.0pt; line-height: 115%;">Hello All, <o:p></o:p></span></b></div>
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<b><span style="font-family: "georgia" , "serif"; font-size: 14.0pt; line-height: 115%;">Sunday Special Class on
Taxation of Foreign Remittances<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "serif";">Hope you like my previous class on
taxation on Remittances for Students.<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">Today
we will study purely for Remittances for Director Fees & Remuneration<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "serif";">It is very important to understand.<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">It applies to all Directors
and top level officials of the company.<o:p></o:p></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">1.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">What
does DTAA says:</span></b></div>
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<span style="font-family: "georgia" , "serif";">Firstly,
the same is not deal with <b>Article 15 of
DTAA</b>.<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">It is covered under Article
16 of DTAA</span></b><span style="font-family: "georgia" , "serif";">.<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">Article 16(1)</span></b><span style="font-family: "georgia" , "serif";"> says Director and other similar payment derived
by the <b>resident of other country</b> <i>(let says UK)</i> in the capacity of Board
of Director of Indian Company, <b>may be
taxed in India</b>. It means India has the right to tax.<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">Article 16(2)</span></b><span style="font-family: "georgia" , "serif";"> talk about Top Level Officials. It says
salary & wages derived by an <b>Foreign
Residential</b> <i>(lets say UK residential)</i>
in the capacity of Top Level Official position of an Indian company. It also taxed
in India.<o:p></o:p></span></div>
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<b><i><span style="font-family: "georgia" , "serif";">There
is no requirement of services being rendered in India. (it can be rendered from
anywhere in the world, Since it is very difficult to test what services the Director
has rendered for the company & from where.)<o:p></o:p></span></i></b></div>
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<b><span style="font-family: "georgia" , "serif";">There is a short exemption
in Article 15 of DTAA which is available for employees.<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "serif";">It
state as if a <b>foreign employee , NR employee</b>
comes to India to work for a short time, generally <b>less than 6 months</b>, then such kind of salary is not taxable for
short period of time.<o:p></o:p></span></div>
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<b><i><span style="font-family: "georgia" , "serif";">Such
exemption is not available in Article 16 of DTAA.<o:p></o:p></span></i></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">2.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">Meaning
of Board of Director :</span></b></div>
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<span style="font-family: "georgia" , "serif";">It
is same as defined in <b>Companies Act 2013</b>,
but includes a body in charge for supervision of company management.<o:p></o:p></span></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">3.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">What
incomes are include :</span></b></div>
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<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: "georgia" , serif; text-indent: -18pt;">Sitting
fees</span></li>
<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><span style="font-family: "georgia" , serif; text-indent: -18pt;">Director
fees</span></li>
<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><span style="font-family: "georgia" , serif; text-indent: -18pt;">All remuneration
paid for supervising kind of services.</span></li>
<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><span style="font-family: "georgia" , serif; text-indent: -18pt;">Payment
could be done either in cash or in kind (i.e. use of car, house etc.</span></li>
</ul>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">4.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">Certain
Issues to understand :</span></b></div>
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<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><b style="text-indent: -18pt;"><i><span style="font-family: "georgia" , "serif";">Issue
1:</span></i></b><span style="font-family: "georgia" , serif; text-indent: -18pt;"> Most of <b>Indian DTAA</b> has only <b>Article 16(1).</b> In such cases if we have Top Level Official
to whom we have paid remuneration, then the same is deal with <b>Article 15 of DTAA</b>.</span></li>
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<span style="font-family: "georgia" , serif;"><br /></span></div>
<ul>
<li> ·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal; text-indent: -18pt;">
</span><b style="text-indent: -18pt;"><i><span style="font-family: "georgia" , "serif";">Issue
2</span></i></b><span style="font-family: "georgia" , serif; text-indent: -18pt;">: Suppose if the services
are rendered by the Director in India for a <b>short period of time</b>, assume we also have <b>Article 16(2)</b> with that country, then we scan tax only that part of
salary for which the Director comes to India.</span></li>
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<span style="font-family: "georgia" , serif;"><br /></span></div>
<ul>
<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><b style="text-indent: -18pt;"><i><span style="font-family: "georgia" , "serif";">Issue
3</span></i></b><span style="font-family: "georgia" , serif; text-indent: -18pt;">: If an Indian company
employees a person who is a <b>Director or
a Top Level Official</b> <b><i>(i.e. they has sign a contract with an Indian
company in India)</i></b>, has rendered serves from <b>sitting anywhere else in India</b>, the same is <b>still taxable in India,</b> even if service is rendered form outside India,
<b>since the source remain in India as the
contract is sign in India. </b></span></li>
<li><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">This is the parts which normally miss out by most of us.</span></b></li>
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<span style="font-family: "georgia" , serif;"><b><br /></b></span></div>
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<li>·<span style="font-size: 7pt; font-stretch: normal; font-variant-numeric: normal; line-height: normal;">
</span><b style="text-indent: -18pt;"><i><span style="font-family: "georgia" , "serif";">Issue</span></i></b><span style="font-family: "georgia" , serif; text-indent: -18pt;"> <b><i>4</i></b>: If an Indian company has a <b>Branch Office</b> or a <b>Set up outside India</b>, where a separate employment agreement entered
into, the section 5 and section 9 will not attracted.</span></li>
</ul>
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<span style="font-family: "georgia" , "serif";">Hope this is found interesting and useful
to you and the same is clear. Next we will discuss on some more remittances.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">Looking
forward for a feedback and open discussion.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">You
can reach me at :<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">Thanks & Regards,<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">CA Mohit Bansal<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">+91-9045773456<o:p></o:p></span></div>
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<a href="mailto:mhtbsnl@gmail.com"><span style="font-family: "georgia" , "serif";">mhtbsnl@gmail.com</span></a><span style="font-family: "georgia" , "serif";"> <o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";"><br /></span></div>
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CA Mohit Bansalhttp://www.blogger.com/profile/15695850788515210683noreply@blogger.com0tag:blogger.com,1999:blog-9181576235739558336.post-8934734905825179492016-10-08T09:38:00.000-07:002016-10-08T09:38:54.548-07:00Remittances for Students<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span style="font-family: "georgia" , "serif";">Today
we will study purely for Remittances for Students<o:p></o:p></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">1.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">Residential
Status Issue:</span></b></div>
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<b><span style="font-family: "georgia" , "serif";">If
student going for education outside India</span></b><span style="font-family: "georgia" , "serif";">: It clearly means they are not going for Employment<o:p></o:p></span></div>
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<b><span style="font-family: "georgia" , "serif";">In
each year we have to test the physical stay of the student in India, if they
are in India > 60 days – They will be consider as Resident of India.<o:p></o:p></span></b></div>
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<span style="font-family: "georgia" , "serif";">Normally, they cannot take up employment
while studying, even the <b>VISA</b> also
not permit the same. <o:p></o:p></span></div>
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<span style="font-family: "georgia" , "serif";">However, if they join some extra work in college
or somewhere else, for which they receive <b>stipend</b>,
then it is <b>not covered under employment.
<o:p></o:p></b></span></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
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<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">2.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">What
does DTAA says:</span></b></div>
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<b><span style="font-family: "georgia" , "serif";">Article
20 states</span></b><span style="font-family: "georgia" , "serif";">: Relief is
sought to be given in the <b>country of
study.<o:p></o:p></b></span></div>
<div class="MsoListParagraph" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpFirst" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">If source of payment for the study, maintenance,
etc. Outside the country, where he goes
for study <b>let says USA</b> and, if the
money is coming from outside country <b>let
say India</b>, <b>the said amount is not
liable to tax in USA.<o:p></o:p></b></span></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">However, if the students happen to get
some funding from <b>USA itself</b>, them
we have to check the <b>domestic law</b>. So
in this case, <b>there is a risk of
taxation<o:p></o:p></b></span></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><i><span style="font-family: "georgia" , "serif";">Crux: Money coming from outside USA i.e. from India
or anywhere else, and if it goes to USA for student education, maintenance etc,
- it could not be liable to tax<o:p></o:p></span></i></b></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpLast" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">Student should be <b>resident of India</b> in the year of leaving or in the immediately preceding
year.<o:p></o:p></span></div>
<div class="MsoListParagraph" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">If they are <b>not a resident of India</b>, then the above mention relief will not be available.
However, we need to check the domestic law for any other relief’ available.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif; text-indent: -18pt;"><br /></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif; text-indent: -18pt;">3.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">Time limit for the relief</span></b><span style="font-family: "georgia" , serif; text-indent: -18pt;">.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpFirst" style="text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "georgia" , "serif";">Normally
the relief is available for 5 years</span></b><span style="font-family: "georgia" , "serif";">,<o:p></o:p></span></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormalCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">However in some <b>DTAA Agreements</b>, <i>no time
limit is mention</i>, The Agreement states in the article, “<b>anytime which is reasonable”</b>. <o:p></o:p></span></div>
<div class="MsoNormalCxSpLast" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">So in such cases, we have to take a
normal call for a reasonable time.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">4.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">From
whom the remittance is made :</span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "georgia" , "serif";">If the
payment is made by parents : Purely <b>Not
taxable</b><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><span style="font-family: "georgia" , "serif";">Payment
by a college/ Institution covered under section <b>10(23C) or 12AA</b> of Income Tax Act, 1961 – Then it is not to be considering
under section 56 of Income Tax Act, 1961 and hence <b>not liable to tax.</b><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "georgia" , "serif";">Scholarship</span></b><span style="font-family: "georgia" , "serif";">: Covered under section <b>10(16)</b> of Income Tax Act, 1961 which is
<b>Exempt</b>.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">However, Definition
of scholarship is not defined, so we have to take a general meaning.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">If any money is
awarded based on some merit, criteria or some manner by an organization/trust/fund
whose main object is to support students in their education, then it is covered
in the definition of Scholarship.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="text-align: justify; text-justify: inter-ideograph;">
<b><i><span style="font-family: "georgia" , "serif";">My Expert Comment:</span></i></b><span style="font-family: "georgia" , "serif";"> If student anyhow save some money out of
Scholarship, then the same would be taxable.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo2; text-align: justify; text-indent: -18.0pt; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "symbol"; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><!--[endif]--><b><span style="font-family: "georgia" , "serif";">Now sometime costs are being paid by a person
who is not a relatives. </span></b><span style="font-family: "georgia" , "serif";"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">Then
we have to check section 56 of Income Tax Act, 1961. In my view it is taxable. <b><i>Most of us miss this section.</i></b><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;"><br /></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif"; mso-bidi-font-family: Georgia; mso-fareast-font-family: Georgia;">5.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; font-weight: normal; line-height: normal;"> </span></span></b><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">If
the Payment is made to a Foreign Education Institution</span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 54.0pt; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">Generally
it is <b>not liable to Tax</b>, unless that
Foreign Education Institution have <b>Permanent
Establishment in India</b>.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">In
most cases, Foreign Education Institution doesn’t have Permanent Establishment
in India due to their policies framework.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";">Still
we need to discuss the same.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "georgia" , "serif";">Case 1:</span></b><span style="font-family: "georgia" , "serif";"> Suppose any Foreign Education
Institution <b>tie – up</b> with any Indian
Education Institution to promote their Institution programmes and to enroll students,
then this is <b>not to be considering as Permanent
establishment.</b><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "georgia" , "serif";">Case 2:</span></b><span style="font-family: "georgia" , "serif";"> If any Indian Education Institution
handed over their business operation to Foreign Education Institution and that
Foreign Education Institution comes India and perform the function. i.e. only Infrastructure
is of Indian Education Instituting and running by Foreign Education Institution
, <b>then it is treated as Permanent establishment</b>.
<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<b><span style="font-family: "georgia" , "serif";">Now if there is any linkage
b/w students going abroad & this PE, then it give rise to taxation<o:p></o:p></span></b></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif; text-indent: -18pt;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif; text-indent: -18pt;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif; text-indent: -18pt;">6.<span style="font-family: "times new roman"; font-size: 7pt; font-stretch: normal; line-height: normal;">
</span></span><b style="text-indent: -18pt;"><span style="font-family: "georgia" , "serif";">Now if the student is coming to India</span></b><span style="font-family: "georgia" , serif; text-indent: -18pt;">.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;">In Such cases, we have to check from where the finding is
coming.</span><span style="font-family: "georgia" , serif;"> </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;">If the </span><b style="font-family: Georgia, serif;">funding is coming
from outside India</b><span style="font-family: "georgia" , serif;">, the it is not liable to tax (as per the DTAA Agreement).</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;"><br /></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , serif;">However if there is no DTAA, then we have to check the risk
of its taxability under section 56 of Income Tax Act, 1961.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><br /></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>Hope this is found interesting and useful
to you and the same is clear. Next we will discuss on some more remittances.<o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpFirst" style="text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>Looking
forward for a feedback and open discussion.<o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<br /></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>You
can reach me at :<o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>Thanks & Regards,<o:p></o:p></b></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>CA Mohit Bansal<o:p></o:p></b></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><b>+91-9045773456<o:p></o:p></b></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin-left: 0cm; mso-add-space: auto; text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "georgia" , "serif";"><a href="mailto:mhtbsnl@gmail.com"><b>mhtbsnl@gmail.com</b></a> <o:p></o:p></span></div>
</div>
CA Mohit Bansalhttp://www.blogger.com/profile/15695850788515210683noreply@blogger.com0