How does the India-US or India-UAE tax treaty affect my income?
India has Double Taxation Avoidance Agreements (DTAAs) with 90+ countries under Section 90 of ITA 1961 (Section 159 of ITA 2025 for Tax Year 2026-27 onwards). The treaty can reduce or eliminate withholding tax on dividends, interest, royalties, and capital gains. We map each income stream to the relevant DTAA article, confirm the beneficial rate, and issue a Tax Residency Certificate (Form 10F) application if required to claim treaty benefits under Rule 21AB.
What TDS rate applies when I pay a foreign company for software or services?
Payments to non-residents for royalties or fees for technical services attract TDS under Section 195 of ITA 1961 (Section 393 read with Section 195 of ITA 2025). The rate is 10% under most DTAAs for royalties/FTS, versus 20% under the domestic law default. We determine the applicable DTAA rate, verify the foreign entity does not have a Permanent Establishment in India (which could trigger business income taxation), and issue the Form 15CB certificate and coordinate Form 15CA filing before remittance.
Does my foreign subsidiary create a Permanent Establishment risk in India?
A Permanent Establishment (PE) arises under the applicable DTAA article (typically Article 5) when a foreign entity has a fixed place of business, dependent agent, or construction activity in India beyond treaty thresholds. Once a PE exists, profits attributable to it are taxable in India under Section 9(1)(i) of ITA 1961 and transfer pricing rules under Sections 92 to 92F apply. We conduct a PE risk review covering physical presence, employee activities, and intercompany contracts, and recommend structural safeguards.
How is income from foreign assets or foreign bank accounts reported in India?
Indian residents must report foreign assets (bank accounts, shares, immovable property, beneficial interests) in Schedule FA of ITR-2 or ITR-3, as required under Section 139 of ITA 1961 (Section 263 of ITA 2025) and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015. Failure to disclose attracts a penalty of Rs. 10 lakh per asset under Section 42 of that Act, in addition to prosecution risk. We compile the Schedule FA disclosures from SWIFT statements, broker records, and property documents.
What transfer pricing documentation is required for my intercompany transactions?
If aggregate international transactions exceed Rs. 1 crore in a financial year, a Transfer Pricing Study (TP Study) prepared by a Chartered Accountant is mandatory under Sec 92E, IT Act 1961 (≡ §172, IT Act 2025), using the most appropriate method prescribed under Rule 10B (CUP, RPM, CPM, TNMM, PSM). The TP Study must be filed in Form 3CEB before the due date. We benchmark the transaction, select the method, compute the arm-length price, and defend the position in assessment proceedings under Section 92CA before the Transfer Pricing Officer.
What is Form 67 and when must it be filed?
Form 67 is a statement of foreign income offered to tax and foreign tax deducted or paid. It is mandatory for claiming Foreign Tax Credit under Sections 90, 90A, or 91 of the Income Tax Act, 1961. It must be filed on or before the due date of filing the ITR under Section 139(1) — 31 July for non-audit assessees and 31 October for audit assessees. Filing after this deadline permanently disallows the FTC claim (Rule 128(9)).
Can unused Foreign Tax Credit be carried forward to future years?
No. As per CBDT Circular No. 9/2017, Foreign Tax Credit cannot be carried forward to subsequent assessment years. Any credit claimed must be utilised in the same year. Additionally, if foreign tax is refunded later, the credit already claimed in India must be reversed in the year of refund.
What documents are required to claim Foreign Tax Credit via Form 67?
Key documents include: (1) Tax Residency Certificate (TRC) issued by the foreign country, (2) proof of tax payment from the foreign country (such as Form W-2 in the US, P60 in the UK, or equivalent), and (3) foreign tax assessment order. These must be furnished along with Form 67 before the filing deadline to ensure the FTC claim is admissible under Rule 128.
