Tax on income from a Foreign source

[Sushil Rawal]

Hi,

Can I please get someone to answer as to what are the Tax obligations on an individual and a company where in an individual, an indian resident, gets paid for his services from a Foreign company directly money getting credited into his bank A/C and Foreign compnay has no local presence in India taking services of this individual from remote?

Many thanks in the anticipation of a prompt response !!

 

Thanks/Sushil

[CAGOPALJI AGRAWAL]

The person who  is resident and ordinarily resident in India as per section 6 of the Income Tax Act., his income from the whole world is taxable unless specifically exempted in the Income Tax Act.

[Sushil Rawal]

Thx Gopalji but what'd be the company's obligations in regards to tax in this case ?

[Sushil Rawal]

Also if salary is received from a foreign company , which does not have any office in India, then shouldn't the services being rendered by Indian national from india to overseas company be treated as export of services ? In which case ,as per my limited knowledge,money recived by Indian national would be non- taxable ? Please advise !!

[CAGOPALJI AGRAWAL]

The foreign company is not laible to deduct tax in such cases and the law can not travel beyond its territory. The service rendered by individual (export of services) are taxable now and enjoy no exemption/deduction.

[Sushil Rawal]

Thx Gopalji, Information so far was really helpful.

I've one last question - Under the same circultances what would be company's reponsibilities in regards to paying taxes ? Should they be paying taxes too inlieu of services taken from an indian resident ?

AI Summary

Taxation of foreign-source income: resident Indians taxed on worldwide income; foreign payer not required to withhold tax. An Indian resident is taxable on worldwide income, so remuneration received from a foreign company for services rendered from India is taxable in the hands of the resident. A foreign company with no presence in India is not obliged to withhold Indian tax, and characterizing services as export does not automatically exempt the Indian recipient from Indian income tax.