Need an example for section 10(6)(vi)
This query is : Resolved
28 February 2017
Could anyone give me an example for 10(6)(vi) satisfying all the conditions laid in the section. I would like to know why a foreign enterprise would send their employees to India for rendering services in India while they are not engaged in any business in India. because even outsourcing employees for a work is a business. And when there is no business activity in India why would the enterprise have income taxable in India?
Thanks
Thanks
28 February 2017
Take this example, one person in India imported an equipment/machinery with one year warranty from a foreign enterprise having no PE in India. During the warranty period the foreign enterprise has to carry out the repairs free of charge in India.
Under the above conditions if the foreign enterprise sends a non resident for attending repairs of the equipment and his stay in India is less than 90 days then the non resident is not liable for payment of any income tax in India on the salary paid to him by the foreign enterprise for the services rendered in India.
Here no business activity is carried out by the foreign enterprise and no payment is recived by the enterprise for this repair work,
Under the above conditions if the foreign enterprise sends a non resident for attending repairs of the equipment and his stay in India is less than 90 days then the non resident is not liable for payment of any income tax in India on the salary paid to him by the foreign enterprise for the services rendered in India.
Here no business activity is carried out by the foreign enterprise and no payment is recived by the enterprise for this repair work,
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28 February 2017
sir could you also try to include condition no.3 of the section and give the example? thanks
28 February 2017
For the above example condition No. 3 also applicable. As there is no payment involved in this work to the foreign enterprise, no income is chargeable under the Indian income tax to the enterprise which doesn't have any PE in India.
28 February 2017
sir the 3rd condition reads,
"(c) such remuneration is not liable to be deducted from the income of the employer chargeable under this Act "
so my doubt is how can a foreign enterprise's income be chargeable to tax under IT act when it can't carry any business activity as mentioned in condition 1.
thanks
01 March 2017
Other heads of income like consultancy are there other than business.
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01 March 2017
sir if that is supposed to be understood as income from other heads like IOS, why do they need to mention separately that the expense incurred on salary paid to these non residents is not liable to be deducted from the income of employer as per IT act? They need not mention that as expense incurred for business purposes can't be anyways deducted from income from other heads.
01 March 2017
You understand this way, if the salary is claimed as deduction in the taxable income then such salary will not be exempted in the hands of salary earner.
01 March 2017
You understand this way, if the salary is claimed as deduction in the taxable income then such salary will not be exempted in the hands of salary earner.
01 March 2017
sir. my doubt is should it be mentioned in the act that employer can't claim deduction of business expenses against other sources?
01 March 2017
Not necessary, as it is mentioned as remuneration is not liable to be deducted from the income of the employer, it included all income.
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