Foreign company taxation in India

Income Tax 1961
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Thank you ma’am
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Hey @prudhvi

Let me answer your queries one by one:-

  1. A company incorporated outside India is treated as a resident in India if its Place of Effective Management (POEM) in that year is in India. The company will likely be treated as a Non-Resident Foreign Company, unless it can be demonstrated that real control and decision-making happens in India.
  2. As director is an Indian resident, his global income will be taxable in India including any profits received from foreign company.

Hope this helps!

1 Like
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Hey @prudhvi

The ₹5,00,000 received will be taxable under the head “Income from Other Sources” if it is treated as a dividend, or under the head “Income from Salary” if it is in the nature of salary. Foreign Tax Credit can be claimed only if tax has been withheld on this income in the source country. The 9% corporate tax paid by the foreign company is not eligible for credit in the hands of the individual recipient.

Hope this helps!

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Hey @prudhvi

NRIs are taxed only on income that is either accrued or received within India. Simply transferring foreign-earned income to an Indian bank account does not make it taxable in India. The income received by the director will be reported based on its specific nature and classification.

Hope this helps!

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Thank you so much ma’am