With the increased involvement of international corporations in India’s economic activity, new and complex concerns have arisen from transactions between connected entities within the global corporation. To address this, the Indian Income Tax Act was amended in 2001 to include transfer pricing regulations. Transfer pricing is an accounting practice that seeks to ensure that profits are allocated appropriately between different subsidiaries or divisions of a company in different countries, while taking local tax laws and regulations into account.
These regulations adhere to OECD norms and include a variety of transfer pricing mechanisms and documentation processes, as well as significant penalties for non-compliance.
With the increased involvement of international corporations in India’s economic activity, new and complex concerns have arisen from transactions between connected entities within the global corporation. To address this, the Indian Income Tax Act was amended in 2001 to include transfer pricing regulations. Transfer pricing is an accounting practice that seeks to ensure that profits are allocated appropriately between different subsidiaries or divisions of a company in different countries, while taking local tax laws and regulations into account.
These regulations adhere to OECD norms and include a variety of transfer pricing mechanisms and documentation processes, as well as significant penalties for non-compliance.
TDS (Tax Deducted at Source) is a tax collection mechanism in which tax is deducted by the payer at the time of making payment to the payee. If a person is making a payment to a non-resident or a foreign company, they may be required to deduct TDS as prescribed by the Income Tax Act, 1961. It is important to note that TDS on outward remittances must be deposited with the government within a specified time frame, failing which, the payer may be liable to pay interest and penalties.
EL is a tax that is imposed by the Indian government on certain specified transactions that involve non-resident e-commerce operators and non-resident service providers rendering services like online advertisements, provision for digital advertising space, facilities or services related to online advertisement.
The EL was introduced in India in 2016 as part of the Finance Act, 2016, and it came into effect from June 1, 2016. The primary objective of the EL is to ensure that non-resident specified service providers & e-commerce operators who conduct business in India also contribute to the Indian tax revenue
An expatriate is a person provisionally residing and employed in a different country while being citizen of his native land. The taxation of such expat employees requires a slightly modified computation than the tax computed for a normal resident employee of an Indian organization.
A Tax Residency Certificate (TRC) is a document issued by a country’s tax authority to confirm that an individual or entity is a resident of that country for tax purposes. This certificate is often required to claim tax benefits under a tax treaty between two countries. A TRC is beneficial in claiming relief from double taxation and ensure transparency in remittance.
When a resident buys property from an NRI, she/he must deduct TDS at 20% if the property has been held for more than two years and at 30% if the property is being sold within two years
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