Foreign non-resident business entities may have business activities in a variety of ways. In its simplest form this can take the form of individual transactions in the nature of exports or import of goods, lending or borrowing of money, sale of technical know how to an Indian enterprise, a foreign air-liner touching an Indian airport and booking cargo or passengers, etc. various tax issues arise on accounts of such activities.
The government wants to encourage foreign enterprises to engage in certain types of business activities in India, which in its opinion its desirable for achieving a balanced economic growth. This takes us to the last aspect of activities which enjoy tax incentives in India. The related issues about the taxation of the Multinational Corporations (MNCs) are as follows:1. Taxation of Transactions and Operations of MNCs in India
Taxation of transactions and operations of MNCs fully depends on the definition of income that is taxable in India, qualification of taxable income and the tax rates.Income that is taxable in India
All Income accruing or arising whether directly or indirectly through or from any business connection in India
- Salary is deemed to be earned in India if it is either payable for services rendered in India or payable by Indian Government to a citizen of India for services rendered outside India.
- Dividend paid by Indian Company outside India
- Income by the ways of interest by Indian Government.
- Income by the way of Royalty
- Income by the way of fees for technical services.