Regarding Tax Liability of Foreign Companies in India

[rajeevjain]

One Foreign Based company has opened an office in India, necessary approval from RBI and ROC obtained, PAN card also obtained, the company has 3-4 employees in India.  The salaries and other expenses are sent from HO. The company is doing supplies of various machines and equipments from its Head Office in Foreign Country to India and also doing installation work. The local representatives are doing follow up work. The payments are directly remitted to Foreign Country. The total business during 2011-12 is approx. 20 Crores. What percentage of profit will be calculated by tax department attributable to operations in India. There are expenses incurred by company for its offices in India.


CA. Rajeev Jain

[ashutosh majumdar]

There has to be an objective basis for making the apportionment. I suggest that you get a FAR (Functions, Assets & Risks) Analysis done of the activities in India to determine what a third party would have charged for the same services.

This will be a scientific approach towards attributing profits to the Indian operations.

[srinivasan]

Dear All
As mr majumdar has said, you have to get the TP study done
srinivasan