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.
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.
“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.
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.
Trade Credit is a very popular term in daily business transactions. Trade Credit is a source of short-term financing wherein the Supplier provides an agreed credit period to the buyer to make payment for the supply of goods or services without any interest.
Foreign Exchange Management Act (FEMA) on this transaction since a Non-resident Indian is involved in transactions and remittance money is repatriated outside India. But what about the applicability of Income tax provisions on these transactions.
Foreign investors are more inclined toward options where they have complete control over the entity and also such entities can enjoy benefits as domestic companies. FOCC has become a wonderful source of investment for such investors. FOCC can conduct business in India as a domestic company.
However, the need to buy property outside India keeps on arising in various situations like a resident Individual settling outside India, an Investment opportunity outside India, a business entity needs to set up business outside India, and many others.
Whenever a Foreign National wishes to reside long-term in India, typically a stay that exceeds more than 180 days, one of their key responsibilities is to visit the Foreign Regional Registration Office (FRRO) within the first 14 days of arrival in the territory of India.
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