Direct tax and rbi restrictions

This query is : Resolved

RAMESH (Querist)
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15 October 2011 One of the private Limited company has two directors one Indian and another director is non resident. Now the company proposes to pay salary to all the directors. I would like to mention that there is no branch office in US and one of the directors of the company operates from his home in USA.
Query

Can the indian company pay full salary to the US director saying that the director is on deputation.All the taxes will be deducte in India and only the net salary will be remitted.

Deoes the reimbursement of expenditure to the US director reqires RBI permission

What is the implication under the US tax laws. Will the US tax laws allow such trasaction

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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30 October 2011 1.Can the indian company pay full salary to the US director saying that the director is on deputation.All the taxes will be deducte in India and only the net salary will be remitted.

- YES, Indian Co. can pay full salary but TDS should not be deducted if the person is NR(ie stay is less than 182 days in PY or 60 days in current Previous year and 365 days in 4 previous years)

2.Does the reimbursement of expenditure to the US director reqires RBI permission

- If it the expenditure is normal current account transaction, then there should be no issue for the same.

3.What is the implication under the US tax laws. Will the US tax laws allow such trasaction

- You need to consult US Tax Consultant for the same.

Anuj
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