India, year after year, Is becoming increasingly important in the global economy and, thanks to theThe initiation of a series of government reforms aimed at making the country increasingly “business friendly” and open to international investors, The number of companies that entered the market to do business with you Has increased considerably.
In India there is a large number of enterprises From all over the world: many among them Do not have direct locations but have business relationships with local counterparts. Precisely for these types of companies offering their products and services in the Indian market. it is essential to know the regulations, obligations, and processes involved in paying taxes On revenues made in Indian territory.
An important change that recently came into effect in the country, concerns the’Obligation to file tax returns also for foreign companies/non-resident individuals which are in possession of the PAN number (Permanent Account Number) and who collected money for the sale of their services in India in the 2017/2018 fiscal year (the PAN, for those who are unaware, is a 10-digit alphanumeric code issued by India's Income Tax Department, useful for tracking all transactions of those operating in India from a tax perspective and an indispensable tool for a company that wants to do business in India).
Under this legislation, the taxpayer is responsible for paying taxes on income earned in India (and thus has an obligation to file a tax return) But he will not have to pay additional taxes, as the TDS (Tax Deduction at Source) will have already been deducted by the Indian client at the time of payment. The same client, will then take care of notifying the Indian tax authorities of this deduction, specifying the PAN of the nonresident taxpayer. Subsequently, the Indian authorities will do an audit to verify the regularity of the whole process: if there are any problems, the local tax office will send a notification to the foreign company, specifying that legal action may be taken if the tax return is not filed.
India is a market that cannot be called simple and deserves detailed insights before an approach. Precisely because of these reasons it is advisable to rely on experts who know the Subcontinent well: Octagona, thanks to its direct offices in New Delhi, Pune and Bangalore and its team of Italian and Indian experts, is able to provide Both the service related to obtaining the PAN both that relating to the preparation of the tax return.
If you would like to learn more about our activities please contact the telephone number 059.9770184 or send an e-mail to the address [email protected]: you will receive all the information you need.
Yes, the obligation applies to foreign companies and non-resident individuals who have a PAN number and have received money from the sale of services in India in the fiscal year 2017/2018. The taxpayer is responsible for taxes on revenues generated in Indian territory and must therefore submit the declaration.
The PAN (Permanent Account Number) is a 10-digit alphanumeric code issued by the Indian Income Tax Department. It serves to track all transactions of anyone operating in India from a tax perspective and is an indispensable tool for a foreign company wishing to do business in the country.
No, the non-resident company does not have to pay any additional taxes, because the Indian customer deducts the TDS (Tax Deduction at Source) at the time of payment. However, the obligation to submit the income tax return remains, as the taxpayer is responsible for the taxes on the income earned in India.
The Indian client notifies the tax authorities of the TDS deduction made on the payment, specifying the PAN of the non-resident taxpayer. The Indian authorities then verify the correctness of the entire process by linking the deduction to the tax code of the foreign company that received the fee.
The company risks legal action. If the Indian authorities detect a problem, the local tax office sends a notification to the foreign company, specifying that legal action could be taken against it if the income tax return is not submitted.
Octagona offers both assistance in obtaining the PAN and the preparation of the income tax return for non-resident companies. It operates with offices in New Delhi, Pune and Bangalore and a team of Italian and Indian experts who are familiar with the market in the subcontinent.
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