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INSIGHT : India-Nonresidents Exempt from Filing Income Tax Return March 31, 2020
Published in: Articles
Disclaimer : The material contained in this publication is solely for information and general guidance and not for advertising or soliciting. The information provided does not constitute professional advice that may be required before acting on any matter. While every care has been taken in the preparation of this publication to ensure its accuracy, Vaish Associates Advocates neither assumes responsibility for any errors, which despite all precautions, may be found herein nor accepts any liability, and disclaims all responsibility, for any kind of loss or damage of any kind arising on account of anyone acting/ refraining to act by placing reliance upon the information contained in this publication.
The requirement to file a tax return in India is provided under Section 139(1) of the Indian Income-tax Act, 1961 (the Act), whereby all companies are required to furnish an income tax return irrespective whether the income earned by them (which has territorial nexus with India) is chargeable to tax in India or not (see Castlet on Investment Ltd and XYZ/ABC Equity Fund for such obligation on foreign companies).
Section 115A(5) of the Act provides relief to nonresident taxpayers who derive dividend and/or interest income from the requirement to furnish a tax return in India, subject to the condition that the tax has been with-held by the Indian payer in terms of the provisions of the Act.
At present, no such exemption is available to nonresidents deriving income by way of ‘‘royalty’’ or ‘‘fees for technical services’’ (FTS), subject to tax in India under clause (b) of sub-section (1) of Section 115A of the Act. In the Finance Bill, 2020, which was tabled in the Lower House of the Parliament on February 1, 2020, provisions of Section 115A of the Act are proposed to be amended to extend the exemption from the requirement to furnish tax returns in India to nonresidents deriving income by way of royalty or FTS, where tax has been withheld at source.
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