Dtaa india with usa

No ,the set off of Losses can be either from a Branch of Indian Company or on a merger of Indian Company with US LLC.

 

Anuj

+91-9810106211

femaquery @ gmail.com

Dear Anuj, Have a related question - what is the implication under India -USA DTAA for a LLC incorporated by an Indian Company ? If the LLC goes for pass-through option, then the profits will be taxed in hands of Indian company in USA per local rates. Moreover, it is taxed again in India since global income for residnet is taxed. Will the Indian Company be able to claim credit for the taxes paid in US while filing its Indian Return? In my view it may be possible if you read article 25. If the Indian company forms a C-corp instead, then there is not double tax on profits. So a c-corp may be a preferred option. What is your view? Does Article 25 only allow credit for dividend disttibtion tax paid in USA or also the tax paid on profits in USA? Kindly confirm.

Dear Vinita,

US LLC is a seprate entity and the indian investment there is just a shareholding of indian company.

Practically ,I wonder why the Indian company will like to go to pass through option as it can expose it to Indian Taxation.

But theoritically if it does then I need to check what shall be its implications.

 

Anuj

+91-9810106211

femaquery @ gmail.com

Dear Anuj,

Actually they want to go for LLC because C-corp involves double taxation within USA.  Since tax is payable in USA on the profits as well at the time of distribution of income.   But LLC offers a pass through option wherein there is no double tax in US.  But upon review of US-India DTAA, in my view LLC would also involve double tax albeit in both countries, since the profits in US would be taxed in US as well as In India in hands of Indian Company, in case they go for pass through option.  Also, I have read some where that US -India treaty does not allow credit for US taxes paid except to the extent of tax paid on dividend.  But would like to reconfirm this with an expert.

Would appreciate if u can pls comment on my view based on your experience in this regard.

Many thanks!