As per Section 90 and 90A of Income Tax Act, A non-resident Indian can avoid taxability liability in India on income generated in India by furnishing a Form 10F and Tax Residency Certificate from another country. But what about if a Resident Indian pays Income Tax in another country and is liable to pay income tax on that income in India as well?
Double Taxation avoidance agreement is entered between two countries to avoid dual taxability of the same income in 2 countries. Section 90 of Income Tax Act, 1961, permits the central government to enter into agreement with any other country to avoid double taxation and maintain mutual economic relations, trade and investments. In accordance with Double Taxation Avoidance Agreement (DTAA), Income is taxed in only one country and the assessee is not required to pay tax in another country.
Export of goods and services forms an important part of the economy of every country, whether developing or developed, as exports bring foreign currency to the country. Since, a country is providing its resources to another country, therefore, government makes all the efforts that corresponding foreign currency flows into the country at the earliest. For this purpose, various regulations are provided under Foreign Exchange Management Act (FEMA). As per FEMA, foreign currency with respect to export of goods and services should be brought into the country within 9 months from date of export.
“Merchant Trading Transactions” are those transactions wherein goods neither enters into India nor Moves out of India. However, shipment moves from one country outside India to another country outside India with an Indian acting as intermediary in such a transaction.
Foreign Trade Policy 2015-2020 was applicable and after 8 years the government has announced a new Foreign Trade Policy 2023 (FTP 2023) on 31st March, 2023 which is applicable from 1st April, 2023.
Concept of Prepaid Payment Instruments (PPIs) or digital wallets or e-wallets (Electronic Wallets) has spread widely in India over the last few years. PPIs or e-wallets are almost used everywhere to procure goods and services and for transfer of funds from one person to another. Accepting payments through digital wallets also accelerates business turnover. To promote a cashless environment, digitalisation and contact less payments, the government is taking all the possible steps to promote PPIs. Various PPIs have been issued so far in India such as Bharatpe, Paytm, UPI, Phonepe etc. and PPIs is issued by both banking and non-banking companies.
In term of Bank Accounts, NRI and POI are permitted to open and operate Non-Resident Ordinary (NRO) Account, Non-Resident External (NRE) Rupee Account and Foreign Currency (Non-Resident) (FCNR) Account.
Export of goods and services is the most regulated transaction as it takes domestic products into the international market and brings foreign currency in India. An exporter is required to furnish various forms and documents with different authorities to substantiate that goods have been actually exported and consideration for such export is received in convertible foreign exchange.
As per Section 4 (Holding of foreign exchange, etc.) of FEMA, no person resident in India is permitted to possess any foreign exchange, foreign security or any immovable property situated outside India.
Person is not allowed to possess foreign exchange whether in India or outside.
However, exemption from this general prohibition is given under Section-9, i.e, Exemption from realization and repatriation in certain cases.
In India, remittances are allowed to be sent to foreign countries. Such remittances are called outward remittances. Similarly, remittances are also allowed to be received by a company or entity set up in India. Remittances which are received in India are called as inward remittances. The Reserve Bank of India (RBI) is the main regulatory authority dealing with foreign exchange transactions within the country.
Persons who are living outside India are required to send funds to India on a very frequent basis for their family maintenance. Therefore, Money Transfer Service Scheme (MTSS) is formed to make the process of inward remittance for individuals easy.
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