Payments to Indian Directors.

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vineet jindal (Querist)
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17 April 2011 Hi all,

Suppose if a person of India is appointed as a Director of a Company of United States and is paid Managerial Renumeration for his Service. He is providing his Services from India only.

1. Where his Income will be held for Tax in India or Abroad????

2. If he deposit his income in foreign banks and later transfer in Indian banks????

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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17 April 2011 First check his residential status.
In this case the asssessee is resident because " He is providing his Services from India only".

In case of an ordinarily resident foreign as well as Indian Income, are taxable.

Q1. His income will be taxable in India.
Q2. His income will be taxable in India.

vineet jindal

vineet jindal (Querist)
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17 April 2011 Thanks for the Reply..

The above said person is an Resident Indian. He has never visited abroad .He was paid Sitting fees from the Foreign Company for being a Director.

1.Will the Foreign Company required to deduct TDS on the Tax, and if yes then how he can claim the tax benefit in India.

2. Will the Double Tax Treaty Agreement between India and USA will have on this ?? if yes then what will be the effect??

Pankaj K Gupta

Pankaj K Gupta (Expert)
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18 April 2011 Dear Mr Jindal,
The TDS Provisions, as applicable in US has to be applied by paying Company on payments. To my view, You should not bother for it.
About DTAA treaty, As India already have DTAA with US, the credit of Taxes paid / deducted (If any) in US has to be claimed in Indian TAX Return with suitable documentation.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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18 April 2011 As per Article 17 of India US Treaty Sitting Fees shall be taxable in both the countries. Hence the US parties may deduct TDS as per their law,but the credit of taxes paid in USA shall be available in India.

vineet jindal

vineet jindal (Querist)
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18 April 2011 Thanks u all for the revert...

Please let me know :-

1.What are the papers or documentation needed for claiming the Tax deducted by US Entity in India?

2. If the Indian Director is paid renumeration for the Services provided by him to the US Entity ? Then will the procedure change or will the different laws will become applicable?

3. If the Amount so paid is deposit in the US Account of the Indian director after deduction of TAX by the US Company. and then if he transfers that amount to him Account will it have impact on his TAX liability in India , as the director is in India only and have never visited US ???

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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19 April 2011 1.The tax deduction papers provided by US Company shall form base for claiming the same in India.

2.The answer is "No" for Income Tax Act.

3.The answer is "No" for Income Tax Act.

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