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CA Sumiit B Nagpal (Business) (1077 Points)

28 September 2011

My friend is starting a partnership firm wid 2 more partners. They would be the like , associates of a foreign co. located in US.

Now the query is they would be selling online courses which are affiliated to foreign universities and the payment too would be recieved in $. all sale is to students of US nd Canada, and firm located in india wid all support system here only.

They would be paying tax in US.

Now wat r d implications of FEMA , Income tax and any other governing law in this regard. all access by students to purchase the course is by their website.

Any permissions needed and if yes which ones?

plz reply A.S.A.P

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6 Replies

Sudhag (Chartered Accountant and Company Secreta) (1231 Points)
Replied 29 September 2011

From FEMA prespective we have to see that whether under FEMA the Indian resident can enter into the partnership with the Non resident. A resident individual can enter into partnership with non resident only subject to the prior approval of RBI. Please refer attached for details https://www.rbi.org.in/scriptts/BS_ViewMasCirculardetails.aspx?id=6532#L16

therefore kindly consider the permission from RBI before such partnership can be entered and before doing any further structuring.

Regards,

CA. Sudha G. Bhushan

sudhag999 @ gmail.com

CA Sumiit B Nagpal (Business) (1077 Points)
Replied 29 September 2011

Thankyou so much sir, but partnership is between only 3 persons , all r indians. but the service they r providing i.e. online classes through sale from website only is only to the students of US and Canada, money will be recieved in $ and it will be deposited straight into their bank a/c which is in india

Sudhag (Chartered Accountant and Company Secreta) (1231 Points)
Replied 30 September 2011

Dear Sumeet,

In that case , there is no problem in this transaction from FEMA prespective.

Whole of the income is taxable in India.

I hope above helps.

Regards,

Sudha

CA Sumiit B Nagpal (Business) (1077 Points)
Replied 30 September 2011

Originally posted by : Sudhag
	Dear Sumeet, In that case , there is no problem in this transaction from FEMA prespective. Whole of the income is taxable in India. I hope above helps. Regards, Sudha

But its a kind of export type, they will be recieving all money after paying tax in US, dnt u think that DTAA btwn india and US will be relevant

Sudhag (Chartered Accountant and Company Secreta) (1231 Points)
Replied 30 September 2011

No since they are Indian residents theire 100% income is taxable in India. But the credit of taxes already paid can be looked in DTAA.

Regards,

Sudha

CA Sumiit B Nagpal (Business) (1077 Points)
Replied 01 October 2011

Thanx a lot, but i stil have a doubt regarding this, they will be recieving all m oney in $s through normal banking channel,nodoubt, but hw come they are not covered under FEMA, can u plzz clear my dis doubt sir