Tax free foreign income

Hello,

Going by the facts of your case, your   presumptions w.r t taxability of your foreign sources income are incorrect.

First, you will be incorporating a company in UAE which will be operated here from India. Therefore this company may be considered as resident in India on account of POEM rules if its turnover exceeds the threshold of INR 50 crores.

Second, being an Indian resident, when you are holding shares/ beneficial interest in a foreign company, you will be required to disclose the same in your IT returns.

Third, in case you try to remmit it back to India in form of dividend or so it will be considered a seperate transaction and taxed accordingly for which you may need to resort to beneficial provisions of DTAA between two countries.

Given the multiple aspects of this query, it is advisable to get a telephonic consultation where you can share further facts regarding your query fro detailed discussion and precise advisory.

Best Regards, 

- Foreign company having turnover less than or equal to 50Cr is treated as Non-resident in India. Income accrued  and received outside India by foreign company is Foreign Income and not taxable in the hands of non-resident in India. If your residential status will be ROR then global income will be taxable in your hands and you are also liable to disclose ownership in the company in the ITR. If taxable income will be more than Rs. 50 lacs then you are liable to show all Assets and Liabilities in the ITR. As you will be 100% shareholder, any income earned by you by way of interest, commission, remuneration, dividend from the company will be taxable in your hands in India. Income earned by foreign company outside India from any source is not taxable in India. 

Hello,

If the turnover remains below 50cr then that company will be prima facie treated as non resident and no income of the entity will be taxable unless it has any PE in India where any portion of the income can be attributed.

Second, any assets or income of given foreign company should not have any business connection with India to avoid taxation implications. 

Third, if you receive any portion of that income in your hands by way of interest, dividend or anything else then you will be subject to tax on your global income because of being ordinarily resident in India.

Best Regards, 

Hi,

Firstly, UAE company bis not required to pay taxes in india assuming place of effective mangement (POEM) of that company is outside India. While the concept of POEM is not applicable for companies having turnover below 50 crs as of now but you should keep this in mind. To know about the concept of poem, please see. Below link:

https://www.google.com/amp/s/taxguru.in/income-tax/place-effective-management-india-poem.html%3famp

Yes, you need to disclose your ownership in your Itr. All foreign assets needs to be disclosed in ITR.

No, there will not be any tax on UAE Co. If POEM is outside India. We can discuss on POEM over a call in more detailed manner and strategise on how you cam comply with these rules.

Hi

As per my understanding there will not be any tax implications on the income earned from the company being a non resident.