if an Indian resident open a offshore company for receiving commission income in USD from Indian company, then will the offshore company need to pay tax to Indian govt?
provided the turnover is less than 50cr. So will POEM rules will apply or not over it?
“Foreign Company with turnover/gross receipts of
less than Rs. 50 Crores p.a. cannot be considered to
be a Resident in India (Circular No. 8/2017 dated February 23, 2017)”
The offshore company would still need to consider tax implications based on the laws of the country where it's incorporated and potentially face withholding tax in India on the commission income received from the Indian company. In India, commission payments to a non-resident are subject to withholding tax (typically 20% plus surcharge and cess for non-residents without a tax treaty benefit).
So, if an offshore company by resident indian director receives commisison from indian company than offshore company need to pay corporate tax on that income? Commisison is earned by facilitation of export from india to germany for metal goods. The offshore company acts as an agent only.
AS per circular 08/2017 feb 23,2017. If total turnover/income per year is below 50 cr, then POEM doesnt apply and company should be considered foreigner so why they should pay taxes?
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Gupta Sachdeva & Co. Chartered Accountants
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