Professional services in india by a non resident

Hey Sahil, great question about taxation of professional services by non-residents in India, excluding technical services under section 9(1)(vii).

Here’s a simplified take without considering DTAA or international treaties:

1. Are professional services by non-residents taxable in India?

• Income is taxable in India if it arises or is deemed to arise in India under Section 9 of the Income Tax Act.

• For professional services (like actors, cricketers, engineers, lawyers) performed in India, the income is taxable even if the service provider is a non-resident.

• If the services are rendered outside India, typically, the income will not be taxable in India (ignoring DTAA).

2. Business Connection & Taxability

• Business Connection (BC) under Section 9(1)(i) means a non-resident’s business or profession is carried on in India.

• If a foreign firm or professional renders services from outside India but has a BC in India (like a branch office, agents, or other presence), the income attributable to the BC will be taxable.

• If no BC exists, and the services are rendered outside India, generally, income won’t be taxable in India.

• However, if services are performed physically in India, the income is taxable regardless of BC.

3. Examples

• Foreign actor/cricketer performing in India: Income is taxable as it is earned through services physically rendered in India.

• Foreign engineer/lawyer providing services remotely from outside India: Usually not taxable unless there is a business connection.

• Foreign firm providing professional services in India through offices or employees in India: Taxable as it constitutes a business connection.

Summary (ignoring DTAA):

So, to answer your question:

• If the foreign professional provides services in India, it’s taxable here directly.

• If the services are performed outside India, but the foreign entity has a business connection, income attributable to that BC is taxable.

• Without a business connection and services outside India, generally no Indian tax.