Income earned from outside the country

Dear Sir,

Please let me know if your customers are based out in India? If no, then I suggest you to receive the money in Kuwait. In that case, it will not attract income tax in India if you are not a resident in India. Further, even if your customers are in India but you don't have any business connection in India, your income will not be taxed in India if you receive money outside India.

If you have spend 60 days in any financial year, you are not a resident in India.

However, if you receive money in india, tax officer can tax your money in India.

Thanks and Regards

Abhishek Dugar

CA CS B.Com

All your earnings are received through Paypal account against the bills/services rendered by you in Kuwait. The income arises or accrues in Kuwait and not in India. Hence, you will not be taxable in India in respect of such income.

When you transfer from paypal account to your SB account in India, it is only an application of income and not an event giving scope for taxation of income.

Though from taxation point of view, you may not be taxed in respect of services rendered in Kuwait. However, you need to comply with the RBI regulations regarding holding of NRO and NRE accounts.

When you receive money from Indian clients, the Indian clients will have to deduct tax at source u/s 195. Further, as you have a paypal account, it may, however remote it is, be treated as your agent and as your PE and you may be taxed treating it as income earned in India.

Dear Sir,

Safest option would have been having a bank account outside india. However, if it is not feasible a view can be taken that money is received in PayPal account outside India and then transferred to your savings account in India and in essence money is first recived outside India and no tax is payable in India.

However if tax department disputes this, they may levy a tax @ 30? plus cess. Yes, you can deduct the business expenses incurred to earn the money.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

You are staying outside India (Kuwait), rendering services from outside India (Kuwait) to customers outside India and receiving money outside India (in Paypal Account). Though the amount is later transferred to your Indian Bank Account, in my opinion, it is just an Application of Income.

So, ideally your Income should not be taxed in India. However, there is always a possibility that the money may be treated as Earned in India by the IT Dept and may tax you.

To minimize the possibility, it would be better to transfer the Paypal funds to an NRE Account in India. Close all your Normal Savings Accounts in India, if any or get them converted into NRO / NRE Accounts.

As per our view You need to pay full tax at applicable rates as India is not having any DTAA agreement with kuwait and kuwait is a tax free country

Hi,

In case of a resident, the entire income, irrespective of where it is received or accrued or arises, will be taxable in India.

However, in the case of a non-resident, the taxable income is restricted to income that is received in India or is deemed to be received in India or income that accrues or arises in India or income that is deemed to accrue or arise in India.

Explanation 1: Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.

Explanation 2 : For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.

So as per the above explanation. though you have received income in india but that is accured and arises outside India (kuwait) can not be taxable in India.

Kindly refer to the case law of Agra bench of the Income-tax Appellate Tribunal (ITAT) in its recent judgment in the case of Arvind Singh Chauhan versus ITO (ITA No. 319 and 320/Agr/2013) held that the income earned by the individual from a shipping company and credited to the NRE account in India is not taxable as the same does not accrue or arise in India and cannot be deemed to accrue or arise in India as the services were rendered outside India. Further, the ITAT held that the income should also be considered to be received outside India as the assessee was in lawful right to receive the salary at the place of employment outside India, and as a matter of convenience the salary was thereafter transferred to India.

here is the link

http://www.mondaq.com/india/x/299658/Income+Tax/Salary+Received+By+An+Assessee+For+Rendering+Services+Outside+India+Are+Not+Taxable+In+India

https://indiankanoon.org/search/?formInput=%28ITA+No.+319+and+320%2FAgr%2F2013%29+

Hello Sir,

Can you get the funds in a Kuwaiti bank account and then transfer the same to an Indian Bank Account.

If that is not possible, then you may have to shell out 30% as Tax plus 3% as cess. So 30.9% in total.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Dear sir,

No need to pay tax unless you invest this amount in india and earn income from it.