A company has a tax residency of US and it does not have a PE in India. It has a proper tax residency certificate from US Treasury as well as a PAN in India. The company in US is getting royalty payment from India. Withholding tax is deducted by the Indian customers as per the article 12 of the DTAA between India and US. Is the US company required to file income tax return in India considering the provision of Section 139(1) and Section 115G of the Income Tax Act.
21 March 2014
My views: a. 115G applies only to investment incomes. Hence u/s 139(1), US is required to submit return in India. b. However tax liability shall be Nil as TDS is already fully complied.
21 March 2014
Many Thanks for your reply. I am totally convinced. The US company is getting royalty payment from India. Withholding tax rate on royalty is 15% as per the DTAA between India and US. Suppose royalty earned in India is 50 lacs. Some of the customers in India do not withhold tax. Say, tax is deducted on Rs30.00 only @ 15% and no tax is deducted on Rs20.00 lacs. Technically, the taxable income in India is Rs50.00. Should the US company deposit Rs3.00 lacs tax in India?
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