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Non Residents

Determination of Residential Status & Taxability
The process for determination of Residential Status is same as discussed in Non Resident Indian.
 

The taxability of different sources of Income is as discussed below:

  1. Interest Income: Interest income received by a non-resident from Government or from any other person in India is taxable in India.

  2. Salary Income: Any remuneration received by foreign citizen as an employee of a foreign enterprise for services rendered by him in India is exempt, provided the following conditions are fulfilled—

    • the foreign enterprise is not engaged in any trade or business in India;

    • his stay in India does not exceed in the aggregate a period of 90 days in such previous year; and

    • such remuneration is not liable to be deducted from the income of the employer chargeable under the Income-tax Act [Section 10(6)(vi)].

  3. Business Income:​​​

    • Income from business of operation of ship taxable at 7.5% of the gross receipts from such business [Section 44B]

    • Income from business of providing services or facilities in connection with plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils including petroleum and natural gas is taxable at 10% of gross receipt from such business, unless the assessee claims lower profits and gains by maintaining proper books of account and other documents, get the same audited and file the audit report along with return of income. [Section 44BB]

    • Income from business of operation of aircraft taxable at 5% of the gross receipts from such business [Section 44BBA].

    • Income of foreign company from business of civil construction or the business of erection of plant or machinery or testing or commissioning thereof, in connection with a turnkey power project approved by the Central Government is chargeable at 10% of the gross receipts from such business, unless the assessee claims lower profits and gains by maintaining proper books of account and other documents, get the same audited and file the audit report along with return of income. Such income tax return will be subject to scrutiny assessment [Section 44BBB].

    • In any other case, for computing the business income of non-resident, expenditure in the nature of head office expenses is allowable at least of the:

      • Up to 5% of the adjusted income as specified in section; or

      • Actual expenditure attributable to business in India [Section 44C]

  4. Royalty or Fees for Technical Service

    • Royalties and fees for technical services received by non-residents (not being company) or a foreign company (provided income is not attributable to a permanent establishment in India) from an Indian concern or the Government are taxed at a uniform rate of 10%. The date of agreement under which such income is received will henceforth be irrelevant [Sec 115A(1)(b)]​

    • Royalties and fees for technical services received by non-resident (not being company) or a foreign company from an Indian concern or the Government in pursuance of agreement entered after 31-3-2003, if the non-resident has a Permanent Establishment in India or renders professional services from a fixed place shall be taxed on net income [Section 44DA]

    • Any income by way of royalty or fees for technical services arising to any foreign company (as may be notified by the Central Government from time to time) under an agreement entered into with that Government for providing services in connection with security of India is exempt [Section 10(6C)]

DOUBLE TAXATION RELIEF – Section 90/90A

All provisions discussed above are subject to DTAA entered into with various countries or with any specified association in a specified territory outside India. The provision of the relevant tax treaty or domestic law provision whichever is beneficial to the taxpayer would be applicable.

In order to claim treaty benefits the non-resident taxpayer shall be required to provide certificate of his being a resident of country outside India (Tax Residency Certificate) as well as such other documents and information. However, a taxpayer may not be required to provide the information in Rule 10F, or any part thereof, if it is already contained in the Tax Residency Certificate.