Foreign Direct Investment means any investment made by a person resident outside in Indian Companies through equity instruments or in LLPs through capital contribution. When India is in the direction of becoming a developed country, interest of persons resident outside India is increasing substantially in Indian Entities. As the foreign funding is increasing, the regulation by the Central Government is also increasing on FDIs.

Inter-country transactions have increased drastically and entities across the countries are dealing with each other. In such a case, every country has its own method of identification of any entity such as India having PAN and CIN. However, when it comes to global transactions, the international regulatory bodies are facing the issue of identification of entities in absence of any unique identification number.

In a recent amendment, the Income Tax Department has exempted non-resident Individuals and foreign companies from submitting PAN for opening of Bank Account at GIFT International Financial Service Centre. Instead, Foreign companies and non-resident Individuals are required to furnish Form 60.

Form 10F is required to be filed by non-residents for claiming benefit of Double Taxable Avoidance Agreement (DTAA) so that they can get income without deduction of TDS in India. Recently, Non-residents were facing a major dilemma of obtaining PAN for filing of Form 10F on Income Tax portal.

Income Tax Act provides various situations where a foreign company is mandatorily required to obtain PAN. However, there are various situations where PAN is not required as per Law, however, same is required due to practical compliances such as PAN for filing Form 10F for claiming benefit of Form 10F.

As per Statistics, foreign debt has more than doubled in less than two years, as domestic lenders remained cautious in the aftermath of a liquidity crisis and India's Central Bank relaxed regulations for using offshore borrowings.

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.