1. I am a resident of India 2. Have setup a LLC in USA say Company A 3. Another US company say Company B signs a contract with Company A to get software developed 4. Company B pays to Company B in US bank account after deduction of US taxes How can I resident of India claim tax exemption of this income earned through Company A of US?
- Residential status of company and it's promoters is determined separately under the Indian Income tax laws.
- As the company A is incorporated by you in USA therefore it will be treated as foreign company unless such company has permanent establishment in India and deriving income from Indian activities.
- If you are withdrawing any amount from the company A in the form of remuneration or interest or any financial income that would be treated as Income under India laws as you are resident.
Hi
You want the tax exemption in India or US ?
Thanks
Damini
Since you have said it's an LLC registered in USA so it's a USA company and its income won't be taxed in India only your income which you earn from such LLC would be taxed in India and for that also you can claim credit by filing a form for claiming credit of tax deducted in USA.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Dear Sir,
Hope you are doing well !!
A resident will be charged to tax in India on his global income i.e. income earned in India as well as income earned outside India.
However, you can claim the foreign tax credit on your US income u/s 90 & 91 of income tax act.
Under these sections, if the taxpayer is a resident of India, and he has paid taxes outside India, he can claim a credit of such foreign taxes paid against his tax payable in India.
Hello,
A company has a separate legal identity from his promoters, directors. Since your company is registered in the US and assuming it doesn't have a permanent establishment in India, therefore company's income will not be taxed in India.
Regarding the income you derive from your company, that will be taxed in India. Further, if you have paid any taxes in the US on your income, you can get the credit of such tax in India.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
Since, you are Indian resident your worldwide income is taxable in India. Hence your share of profit will be taxable in India. The Indian tax laws provides for claiming credit for income which is double taxed i.e. in India and foreign country. You should offer the share of profit to tax in India as business income and claim credit of the tax paid in US against the Indian tax liability. Sec 90 of the Income-tax Act provides for allowing credit for tax paid abroad. It also provides the manner of computation.
Also, India-US DTAA has such provision, but needs to adopt only after giving supporting of taxes paid abroad and also to prove that income is doubly taxed.
Hello Sir,
You can claim the FTC for taxes paid in US.
In accordance with Rule 128, in order to claim FTC, the taxpayer is required to file following documents on or before due date of filing of return:
1. A statement of :
2. Certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the taxpayer :
3. Proof of payment of taxes outside India
Hi
Since you are resident of India,all your global income will be taxed In India.So Your share of earnings from Comapny A will be taxed with your Income.
What ever tax is deducted there,can be claimed as foreign Tax credit.
But Company will be treated as foreign Co,Its earning will be taxed in USA only.
For claiming credit,you have to fill form no 67 before due date of return filling.
Hope it helps
