Mr. X is doing business in India as proprietor and also in the name of his HUF. Now he wants to establish a company in singapore. He is not a director in a single company in India.
Suppose he establishes a company in Singapore with 99% shareholding. He will also get salary as a Director from Singapore Company.
Queries: 1)Whether Mr. X requires to apply for DIN in India? 2)What are the other provisions applicable in India with regard to Companies Act, Income Tax Act, FEMA, etc.? 3) Any other important aspects which needs to be borne in mind?
21 July 2024
Here are the responses to your queries regarding Mr. X establishing a company in Singapore and his implications under Indian laws:
1. **Director Identification Number (DIN)**: - Mr. X does not need to apply for DIN in India if he is only a director in the Singapore company and not in any Indian company. DIN is required for individuals who intend to be directors in Indian companies as per the Companies Act, 2013. Since Mr. X is not a director in any Indian company, DIN application is not necessary.
2. **Provisions Applicable**: - **Companies Act**: The Companies Act, 2013 of India primarily governs the incorporation, management, and operations of Indian companies. Since Mr. X is establishing a company in Singapore, Indian Companies Act provisions related to directorship, shareholding, and related party transactions would not directly apply. - **Income Tax Act**: Under the Income Tax Act, 1961, Mr. X would be required to declare his income from the Singapore company in his Indian income tax return if he is a resident of India. Global income of Indian residents is taxable in India. However, provisions such as Double Taxation Avoidance Agreements (DTAA) may apply to prevent double taxation. - **FEMA (Foreign Exchange Management Act)**: FEMA regulations are relevant for Indian residents involved in foreign investments and transactions. Mr. X would need to comply with FEMA regulations concerning investments in a foreign company, remittance of funds, reporting requirements, etc.
3. **Other Important Aspects**: - **Tax Implications**: Mr. X should consult with a tax advisor to understand the tax implications in India and Singapore, including any benefits under DTAA. - **Reporting Requirements**: He should be aware of the reporting requirements under Indian laws for foreign assets and income. - **Compliance in Singapore**: Ensure compliance with Singaporean laws regarding company incorporation, taxation, and corporate governance.
### Conclusion: Mr. X can establish a company in Singapore without needing to apply for DIN in India since he is not a director in any Indian company. However, he must comply with Indian tax laws, FEMA regulations, and any reporting requirements for his income and investments in the Singapore company. Seeking professional advice from a chartered accountant or tax consultant experienced in international tax matters is advisable to navigate the complexities and ensure compliance with both Indian and Singaporean laws.
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