Applicability of Income tax

[SANJIV KOTHARI]

Dear

If an Indian Company undertakes turnkry project outside india which involve supply, erection & commissioning outside india and duration of project is 2-3 years. Operation outside india is monitored through site office in that country.India has no DTAA that country.

Would there be any applicability of income tax in the country where projecte is undertaken ??

 

[manoj kumar]

Sir,

The applicability or non apllicabiltiy of Income tax in that country depends upon the Tax incidence mechanism of that country.

In india,Income Tax gets attracted on following incomes (for Resident):

1.Any income received or deemed to be received in india by assesse or on behalf of such assessee during the year.

2.Any income which acrrue/arise or deemed to be accrue/arise in india during the year.

3.Accrues or arises outside india during the year.

Conclusion -

Applicabilty in India- As company is indian company(resident),so Indian income Tax is applicable on the income arising outside india.

Outside India -Depends on the Income Tax Law of that country

AI Summary

Resident company taxation: Indian resident company's foreign project income is taxable in India; host country tax depends on its law An Indian resident company's income from an overseas turnkey project is taxable in India because residents are taxed on worldwide income. Whether the host country taxes that project depends on its domestic tax rules; a site office may create a permanent establishment attracting local tax, and absence of a double taxation agreement means reliance on the foreign jurisdiction's statutory provisions for any local liability.