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Frequently
Asked Questions
Q.14.
What are the benefits available under the Government
policy on 'Deemed Exports' ? Are foreign investors also
eligible for such benefits ?
A.14. Under the present Export and Import Policy
of the Government of India, 'Deemed Exports' means those
transactions in which the goods supplied do not leave
India and the payment for such goods is made in India
by the recipient of the goods. Further, goods supplied
by main/sub-contractors shall be regarded as Deemed
Exports subject to the condition that the goods supplied
are manufactured in India.
Supply
of goods to coal, hydrocarbon, rail, road, port, civil
aviation and other infrastructure projects, other than
power and refinery projects, regarded as 'Deemed Exports'
under earlier Exim Policy will henceforth be regarded
as 'Deemed Exports' only if the Ministry of Finance
notifies permitting duty free imports and extension
of deemed exports benefits to domestic supplies for
such projects. Supply of goods to power and refinery
projects shall continue to enjoy Deemed Exports benefits
as before.
The
Deemed Exports Benefits available are briefly described
hereunder:
-
Deemed Exports Duty Drawback. Under this scheme,
relief on incidence of customs and excise duty paid
on raw materials and components, is allowed. The
rates of Drawback are notified every year by the
Government of India and different rates are applicable
depending upon the nature of raw materials/components
imported.
-
Refund of Terminal Excise duty. When the final goods
are manufactured in India, excise duty payable on
the final products, to be supplied to the owner/customer,
will be allowed to be refunded under this scheme.
The rate of such benefits will vary from product
to product.
-
Advance License for intermediate supply/deemed export.
Advance Licence may be issued for intermediate supply
to a manufacture-exporter of goods to be supplied
to the ultimate exporter/deemed exporter holding
another Advance Licence. Advance Licence can be
issued for deemed export to the main contractor
for import of inputs required in the manufacture
of goods to be supplied to the categories mentioned
in paragraph 10.2(b), (c), (d), (e), (f) and (g)
of the Policy. Advance Licence is issued for duty
free import of inputs, subject to actual user condition.
Such licences (other than Advance Licence for deemed
exports) are exempted from payment of basic customs
duty, additional customs duty, and dumping duty
and safeguard duty, if any. However, advance Licence
for deemed export shall be exempted from basic customs
duty and additional customs duty only.
Foreign
investors are also eligible to aforesaid deemed exports
benefits.
Q.15.
Can a foreign collaborator extend loans to the Indian
joint venture company and is any prior approval required
?
A.15. A foreign collaborator can extend loans
to its Indian joint venture company. Click External
Commercial Borrowings (ECB),
for details.
Q.16.
Has the condition of "Dividend Balancing "
been withdrawn by the Indian Government ?
A.16. Yes.
Q.17.
Is there any restriction on the rate of dividend on
preference shares payable to foreign investors ?
A.17. As per FEMA regulations, the rate of dividend
on preference shares or convertible preference shares,
should not exceed 300 basis points over the Prime Lending
Rate of State Bank of India prevailing as on the date
of the Board meeting of the company in which issue of
such shares is recommended.
Q.18.
Can a foreign company/foreign national buy immovable
property in India? Can a liasion office, or branch office
or project office buy immovable property in India?
A.18. Acquisition
and Transfer of Immovable Property .
Q.19.
Can a foreign investor sell its shares in an Indian
company to another foreign investor ? Is any prior permission
required ?
A.19. A person resident outside India, not being
a NRI or an OCB, can transfer by way of sale his shares
to any person resident outside India.
Permission
of Central Government is required if the person to whom
the shares are being transferred has previous venture
or tie up in India through investment in shares or debentures
or a technical collaboration or a trade mark agreement
or investment in the same field or allied field in which
the Indian company whose shares are being transferred,
is engaged.
A
NRI or OCB may transfer by way of sale, the shares held
by him or it to another NRI or OCB only
Q.20.
Can a foreign national employed in India, out of his
earnings in India, send remittance regularly for the
maintenance of his family living abroad ? What is the
maximum amount that can be remitted ?
A.20. A foreign national employed in India can
make recurring remittances, without any limit, out of
his earnings for the maintenance of his family living
abroad through Bank after payment of applicable Indian
taxes.
Q.21.
Can the foreign national repatriate his savings from
employment in India, at the time of completion of his
employment in India and leaving India for his own country
or another country where he is to take up the next employment.
A.21. A foreign national other than a citizen
of Nepal or Bhutan or a person of Indian origin (PIO)
at the time of completion of his employment in India
can repatriate his savings, through Bank, from such
employment up to Rs.2,000,000/- per calendar year. For
repatriation in excess of this amount, Reserve Bank
of India's (RBI) approval would be required.
Repatriation
of savings by a citizen of Nepal or Bhutan or by a PIO
would require prior permission from RBI.
PIO
means citizen of any country other than Bangladesh or
Pakistan, if
- He
at any time held Indian passport; or
- He
or either of his parents or any of his grand-parents
was a citizen of India by virtue of the Constitution
of India or the Citizenship Act, 1955; or
- The
person is a spouse of an Indian citizen or a person
referred to in sub clause (a) or (b)
The
Indian employer is also permitted to remit the amount
of his contribution towards provident fund/superannuation/pension
fund in respect of expatriate staff in his employment
who are resident in India but not permanently resident
therein.
Q.22.
Is a foreign national on a multi-entry business visa
permitted to take up employment in India ? Does the
Government of India permit change of purpose from 'business'
to 'employment'.
A.22. No. For details click
Immigration Laws - Regulations & Procedures
.
A.23.
Are any benefits available to foreign nationals taking
up employment in India under Customs' Baggage Rules
at the time of transfer of residence to India ? What
goods are permitted to be customs cleared free of duty
and at concessional rates of duty ?
A.23. For details, click Baggage
Rules - Transfer of Residence .
Q.24.
Is branch office or project office established with
the permission of Reserve Bank permitted to remit outside
India the profit of the branch or surplus of the project
on its completion ?
A.24. Such a branch or project office in India
may remit outside India the profit of the branch or
surplus of the project on its completion, net of applicable
Indian taxes, on production of the prescribed documents
and establishing the net profit or surplus, as the case
may be, to the satisfaction of the authorized dealer
through whom the remittance is effected. For more details,
click Setting up Business
Activities in India .
Q.25.
How is the residential status of a person determined
in India under the Income Tax laws?
A.25. A.25. Taxation
of Expatriates
Q.26.
How is a foreign company taxed to Income tax in India?
What are the benefits & exemptions available to
foreign companies under the Indian Income Tax Act?
A.26. A foreign company having a permanent establishment
(branch office, project office, etc.) in India will
be taxed in India on its profits that are attributable
to the permanent establishment in India. Currently,
a foreign company is taxed @ 48% on its total taxable
income.
A
foreign company not having a permanent establishment
in India may also be taxed on all its income which -
- is
received or is deemed to be received in India;
- accrues
or arises or is deemed to accrue or arise in India.
'Deemed
to accrue or arise' includes all income accruing or
arising through or from any property in India, or through
or from any asset or source of income in India, or through
the transfer of any capital asset situated in India.
It also includes income by way of interest, royalty
and fees for technical services paid to a foreign company
by an Indian company. However, Double Taxation Avoidance
Agreements between the Government of India and the Governments
of other countries may provide for more beneficial provisions
for taxation of foreign companies in India.
Q.27.
Whether any relief is given in respect of income which
is subject to double taxation? Which are the countries
with whom India has Double Taxation Avoidance Agreement?
A.27. Tax relief is given in respect of income
that is subject to double taxation. For details and
list of countries with which India has Double Taxation
Avoidance Treaties, click Double
Taxation Relief.
Q.28.
How are expatriates taxable in India?
A.28. Taxation
of Expatriates .
Q.29.
What are the employer’s obligations in respect
of its employees’ under various labour laws and
the Income Tax Act?
A.29. Employer's
Obligations and Labour
Laws Summary
Q.30.
What are the formalities to be fulfilled by an expatriate
on his leaving India?
A.30. In the case of final departure from India,
the foreign national is required to surrender the registration
papers at the port of departure. For details, click
Immigration Law -
Summary .
Q.31.
Is there any Authority for giving advance rulings in
respect of issues which could arise in determining the
tax liabilities of non-residents?
A.31. Yes. For details, click Advance
Rulings .
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