Double taxation avoidance agreement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2015 My client is resident in India. He owns a company in USA wherein he and his wife have 50:50 shareholding. Such company is S Corporation i.e. in the category of Small Corporations as per US tax laws. The company is engaged in the business of trading in equity shares of other company and earn income in the form of profit on sale of equity shares, dividend on shares. Company also provides management consultancy and earns consultancy fees. As per US tax laws if the company is S corporation, then such companies are not liable to pay income tax but shareholder get their share of income in the ratio of share capital they hold and they have to pay income tax as an individuals.

Now my question is how to add following incomes received as shares from S Corporation by the assessee in his total income of India

1) Share of profit from trading in equity shares (such income is shown in US return as short term capital gain as sold before 1 year)

2) Share of dividend from investment by S Corporation in the equity shares of other companies

3) Share of management fees received from S Corporation

Guest

Guest (Expert)

11 September 2015 Although share of income is taxed in hands of shareholders, this income shall not be taxed in India because S Corp is a different "Person" and the share holder is a different "Person" However, if the profit is taken by ur client from the S corporation as dividend, such dividends will be taxable in India subject to DTAA.