International Taxation (Urgent)

The case is:
Mr. X is an Overseas Citizen of India having a dutch passport. He is having a Company in Malaysia and wants to open a dummy company or intermediary company in India to trade with Israel (As there are trade barriers in Malaysia to trade with Israel).
The queries are:
1. Can he get a company registered in India? If yes, What is it's Status, Indian or Foreign Co.
2. Can he open a bank account in India for that company?
3. Do the transactions termed as accrued or received in India?
4. At What rate does the transactions are taxed.

Thankyou.
Replies (2)

Hi Palika!

1. Yes, a foreign citizen can set up a company in India. A company incorporated in India is an Indian Company, A company that is incorporated outside but has operations in India and hence is liable to pay taxes in India is a foreign company. Also, if a subsidiary is incorporated in India and its Place of Effective Management is outside India, like in your case it will be in Malaysia, it will be a Foreign Company.

2. Yes, he can open a bank account in India after incorporation.

3. If the transaction is facilitated through India, it will be taxed in India, both accrued and received.

4. Income Tax Rate for Foreign Companies for AY 2019-20 | FY 2018-19

Nature of Income Tax Rate
Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government 50%
Any other Income 40%

Surcharge

The income tax computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge.

  • Taxable Income exceeding ₹ 1 Crore –  2% of computed income tax.

(However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 1 crore by more than the amount of increase in taxable income.)

  • Taxable Income exceeding ₹ 10 Crores – 5% of computed income tax.

(However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of ₹ 10 crores by more than the amount of increase in taxable income.)

Hope it helps! :)

thank you so much.. it helps a lot.

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