India: What is the tax procedure for non-resident companies operating in the market?

India, Year after year, becomes increasingly important in the global economy and, thanks tothe launch of a series of government reforms aimed at making the country increasingly "business friendly" and open to international investors, the number of companies that have entered the market to make you business has increased considerably.

In India has a large number of businesses from all over the world: many between these they do not have direct headquarters but they do have commercial relationships with local counterparts. Precisely for these types of companies that offer their products and services on the Indian market it is essential to know the regulations, obligations and procedures that characterize the payment of taxes on revenues made in Indian territory.

An important novelty that recently entered into force in the country, concerns theobligation to file a tax return also for foreign companies/non-resident natural persons which they are in possession of the PAN number (Permanent Account Number) and who have collected money for the sale of their services in India in the 2017/2018 fiscal year (the PAN, for those who are not aware of it, is a 10-digit alphanumeric code, issued by the Income Indian Tax Department, useful for tracking all the transactions of those who work in India from a tax point of view and an indispensable tool for a company that wants to do business in India).  

Under this legislation, the tax payer is responsible for paying taxes on the income earned in India (and therefore has the obligation to send the tax return) but you will not have to pay any further taxes, as the TDS (Tax Deduction at Source) will have already been deducted by the Indian customer at the time of payment. The same customer will then take care of notifying the Indian tax authorities of this deduction, specifying the PAN of the non-resident taxpayer. Subsequently, the Indian authorities will carry out a check to verify the regularity of the whole process: in case of any problems, the local tax office will send a notification to the foreign company, specifying that in case of failure to submit the tax return, they could legal action be taken.

India is a market that cannot be defined simple and that deserves detailed insights before an approach. Precisely for 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 and the service related to obtaining the PAN both the one related to the preparation of the tax declaration.

If you want to know more about our activities, contact us the telephone number 059.9770184 or send an email to [email protected]:  you will receive all the information you need.