If a resident becomes an NRI, what would be the tax impact on existing investments?

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If a resident converts the NRI for tax purposes, what would be the tax impact on existing investments? How long can an NRI hold such investments? What are the tax implications if NRIs sell such investments? If NRI continues to hold shares, what would be the taxation of dividends?


Amit Maheshwari, Partner, AKM Global responds, “If the NRI continues to hold investments in Indian stocks and mutual funds (assets), there would be no additional tax implications or reporting requirements. Assets in India must be disclosed under the AL Schedule, if the total income exceeds Rs 50 lakh.The NRI can hold investments in India for as long as he wishes.When selling such shares or mutual funds of investment, the NRI will be liable to pay capital gains tax on the transfer of such assets. Dividends received would be taxable at the rate of 20% (plus applicable surtax and deductible).”

I work for a pharmaceutical major. Recently I received a job offer as a consultant in an EU based company. I will look for potential clients to offer their services. Since they don’t have a branch in India, do I need to set up a company on my own to receive foreign payments? How can I comply with Indian tax regulations? What should I keep in mind to be a consultant abroad?

Amit Maheshwari, Partner, AKM Global responds, “We understand that you are looking to join as a consultant for a foreign company. You do not need to incorporate a company or any other entity in India and you can take the cost of consultation in your account only. Therefore, how you intend to do so is entirely at your discretion. However, there are a few things you may need to keep in mind. You will need to assess whether your services are eligible or not as an export of services under the Goods and Services Tax provisions.Normally foreign business advice is not subject to GST, but if so, you may need to charge GST on your services In any case, you will need to apply for GST registration as in the case of exports, the limit of Rs 20 lakh for registration does not apply. the services qualify as export, you will need to ensure that payments are received in convertible currencies. Also, your income might be subject to TDS in the country of origin and taking cre dit in India for the same, you might need to use some documents as proof of payment of tax by the payer. You will also need to file Form 67 before filing your tax return, if a foreign tax credit is used. Additionally, since the actual nature of the services is not known, you may also need to check whether, due to the services you provide, the foreign company is at risk of permanent establishment in India, c that is, because of its presence in India in any form. , some of the profits of a foreign company may be subject to tax in India. This could be relevant as you may be considered an authorized representative of the foreign company under the tax laws in India.”


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