I tax applicability

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Querist : Anonymous

Querist : Anonymous (Querist)

08 February 2010 One of my friend asked me the I Tax implication in following issue:

1. A foreigner came to India and required to purchase a car. As purchase of car in the name of foreigner is difficult he gave the cost of the car say 2.5 Lac to Mr X (an associted person with foreigner's venture) in cash who purchased ( In Nov'09)the car in his name and hand over the same to the foreigner for use.

2 After using the car, at the time of returning to his country, he asked Mr X to sell the car and the car was sold at a cost of Rs 1.5 Lac (in cash)( In Jan 10). The proceed of sale the foreigner handed over to an institution through Mr X.

3. How Mr X entangled himself from I Tax point of view.

sivadas chettoor

sivadas chettoor (Expert)
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09 February 2010 From tax point of view there is no implication since you acted as a pure agent of the foreigner. But beware of FEMA 1999 and consult that law.

siva208@yahoo.com

Querist : Anonymous

Querist : Anonymous (Querist)

09 February 2010 To establish pure agent what type of documentation is required?

M Prabhakar Menon

M Prabhakar Menon (Expert)
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10 February 2010 Obtain letter from the foreigner that Mr X acted on his behalf at his request.Get copies of his Pasport/Visa to prove he was in India at the time.

CA Sanjeev Kr Jain

CA Sanjeev Kr Jain (Expert)
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10 February 2010 forget about foreigner just check how the 2.5 lac recd on purchase of car was handled

sivadas chettoor

sivadas chettoor (Expert)
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10 February 2010 Please go thro Sec 3 of the FEMA 1999.It says that NO PERSON SHALL RECEIVE ANY PAYMENT BY ORDER OR ON BEHALF OF THE NON-RESIDENT save as otherwise provided under the Act , regulations etc. You cannot make payment also. Thus you will have to be very careful. You may note that the penalty is Rs 5000 for every day of continuing default.Be cautious while dealing with foreigners.

siva208@yahoo.com

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