• Sole prop business income abroad

Hello CA's - I'm looking for tax advisory on the best way to structure my income. 
Facts Summary - 
a) I'm a Resident Indian for taxation purposes and I'm a Director in an India Pvt Ltd Company (entity independent of US entity and not a subsidiary)
b) I run a sole prop business in the US & file tax returns as a Non Resident Alien there (No issues here)
c) As sole prop biz in US, I raise Debt funding for business in US which I pay back (no issues here)
d) I bring in every month a certain some of money from the US withdrawn from my US business for my India living expenses. 
e) As a sole prop in US, let's assume I declared a net profit of $30,000 for the year and paid tax on it. But I have brought into India into my personal account say a sum of $50,000 for the year (with the remaining funds coming through debt raised for business), how would the taxation work?

Scenarios & Questions-
01) Which income should I declare in India? 
 1.1 Entire 50K brought into India
 1.2 Only 20k brought in addition to 30K of profits in US on which tax has been paid
 1.3 Considering the remaining 20K came from business debt, is it taxable at all here
 
02) Which header should I show the income in each scenario for 1.1 or 1.2 as the case may be

03) To Which amount should I be paying taxes in India (20K only & not take FTC or 50K + take FTC)

04) What is the right way and the best way to structure this entire deal to minimize tax impact
Asked 2 years ago in Income Tax

Dear Sir,

 

Hope you are doing well !!

 

We may assist you in entire planning.

 

It is advisable to take a phone consultation for detailed discussion.

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
289 Consultations

5.0 on 5.0

Hi Sir,

 

We have been regularly assisting our clients with respect to these transactions and can assist you for the same. We can have a telephonic consultation for a detailed discussion and to structurize it in best possible manner. You can reach out to us at [deleted] 

Prerna Peshori
CA, Pune
194 Answers
11 Consultations

5.0 on 5.0

- As you have mentioned that your residential status is ROR in previous financial year 2020-21, you are liable to show global income earned and pay taxes on the global income.

1.2) USD 30k is a income earned outside India and would be clubbed with an Indian income. USD 20K is not an income.

2) For business income, you have to fill Schedule BP alognwith Schedule FSI, TR and schedule FA.  

3) USD 30K plus FTC paid on USD 30k

4) If Total income is more than Rs. 50lacs, schedule AL is also applicable.

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

If you are getting any loan in India from outside India you need to check fema regulations.

Although no issues with taxation for such debt.

You need to pay tax only on profit i.e. 30k

 

We need to discuss more on how the tax can be claimed on phone consultation.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
4272 Answers
97 Consultations

5.0 on 5.0

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