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Overview

International Taxation

International Taxation deals with the tax implications of cross-border transactions, income earned abroad, and foreign investments. It includes provisions under Indian tax laws such as the Income Tax Act, 1961, Double Taxation Avoidance Agreements (DTAAs), and global tax frameworks like the OECD’s Base Erosion and Profit Shifting (BEPS) action plans. International taxation ensures compliance with tax obligations across jurisdictions, prevents double taxation, and manages tax risks for individuals, corporates, and multinational entities.

Importance

1. Global Compliance : Ensures adherence to domestic and international tax laws.

2. Prevention of Double Taxation : Utilizes DTAAs to avoid paying taxes on the same income in multiple jurisdictions.

3. Efficient Cross-Border Transactions : Provides clarity on taxation of international trade, royalties, fees, and dividends.

4. Mitigation of Tax Risks : Reduces the likelihood of tax disputes, penalties, or adjustments.

5. Alignment with Global Standards : Follows OECD and BEPS guidelines for fair taxation.


Documents Required



Features

Features & Benefits of International Taxation

Comprehensive DTAA Utilization
Leverages treaty benefits to reduce tax burdens.
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Transfer Pricing Compliance
Ensures arm’s length pricing for cross-border related-party transactions.
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FEMA Alignment
Manages cross-border investments and transactions within regulatory limits.
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Tax Residency Advisory
Determines residential status to optimize tax outcomes.
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FTC Claims
Simplifies claiming tax credits for foreign taxes paid.
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International Taxation

Expatriate Tax Management
Handles dual tax liabilities for foreign nationals and Indian expats.
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TDS on Non-Resident Payments
Ensures accurate withholding and deposit of taxes under Section 195.
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Global Reporting Standards
Aligns with OECD BEPS actions, including Country-by-Country Reporting.
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Disclosures of Foreign Assets
Mandates reporting of foreign income, investments, and accounts.
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Litigation Support
Resolves international tax disputes and queries.
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Comparison Between Domestic and International Taxation

Feature Domestic Taxation International Taxation
Scope Income earned within India Cross-border transactions and foreign income
Tax Framework Income Tax Act, 1961 Income Tax Act + DTAAs + OECD BEPS
Key Provisions Sections 80C, 80D, etc. Sections 90, 92, 195, and FTC rules
Compliance Complexity Moderate High (due to multiple jurisdictions)


Frequently Asked Questions

What is international taxation?

It refers to the taxation of income arising from cross-border transactions or foreign income, governed by domestic tax laws and international treaties.

What is a DTAA?

A Double Taxation Avoidance Agreement is a treaty between two countries to prevent double taxation of the same income.

What is Foreign Tax Credit (FTC)?

FTC allows taxpayers to offset taxes paid abroad against their Indian tax liability for the same income.

What is the role of Form 67 in FTC claims?

Form 67 is mandatory for claiming FTC and must be filed before submitting the ITR.

Who needs transfer pricing compliance?

Companies or entities engaging in related-party cross-border transactions.

What is the penalty for non-disclosure of foreign assets?

Penalties under the Black Money Act can range from fines to imprisonment for non-compliance.

How is residential status determined for tax purposes?

Based on physical presence in India during the financial year and preceding years under Section 6.

What is withholding tax under Section 195?

TDS deducted on payments to non-residents, such as royalties, technical fees, or dividends.

What is BEPS?

Base Erosion and Profit Shifting (BEPS) is an OECD framework to address tax avoidance by multinational companies.

What is Country-by-Country Reporting (CbCR)?

A BEPS action requiring MNCs to report income, profits, and taxes paid in every country they operate.

International Taxation

Overview

International Taxation

International Taxation deals with the tax implications of cross-border transactions, income earned abroad, and foreign investments. It includes provisions under Indian tax laws such as the Income Tax Act, 1961, Double Taxation Avoidance Agreements (DTAAs), and global tax frameworks like the OECD’s Base Erosion and Profit Shifting (BEPS) action plans. International taxation ensures compliance with tax obligations across jurisdictions, prevents double taxation, and manages tax risks for individuals, corporates, and multinational entities.

Importance

1. Global Compliance : Ensures adherence to domestic and international tax laws.

2. Prevention of Double Taxation : Utilizes DTAAs to avoid paying taxes on the same income in multiple jurisdictions.

3. Efficient Cross-Border Transactions : Provides clarity on taxation of international trade, royalties, fees, and dividends.

4. Mitigation of Tax Risks : Reduces the likelihood of tax disputes, penalties, or adjustments.

5. Alignment with Global Standards : Follows OECD and BEPS guidelines for fair taxation.


Documents Required

For Foreign Nationals



Features

Features & Benefits of International Taxation

Comprehensive DTAA Utilization

Leverages treaty benefits to reduce tax burdens.

Transfer Pricing Compliance

Ensures arm’s length pricing for cross-border related-party transactions.

FEMA Alignment

Manages cross-border investments and transactions within regulatory limits.

Tax Residency Advisory

Determines residential status to optimize tax outcomes.

FTC Claims

Simplifies claiming tax credits for foreign taxes paid.

Expatriate Tax Management

Handles dual tax liabilities for foreign nationals and Indian expats.

TDS on Non-Resident Payments

Ensures accurate withholding and deposit of taxes under Section 195.

Global Reporting Standards

Aligns with OECD BEPS actions, including Country-by-Country Reporting.

Disclosures of Foreign Assets

Mandates reporting of foreign income, investments, and accounts.

Litigation Support

Resolves international tax disputes and queries.



Comparison with BIS Hallmark Certification

Feature Domestic Taxation International Taxation
Scope Income earned within India Cross-border transactions and foreign income
Tax Framework Income Tax Act, 1961 Income Tax Act + DTAAs + OECD BEPS
Key Provisions Sections 80C, 80D, etc. Sections 90, 92, 195, and FTC rules
Compliance Complexity Moderate High (due to multiple jurisdictions)


Frequently Asked Questions

What is international taxation?

It refers to the taxation of income arising from cross-border transactions or foreign income, governed by domestic tax laws and international treaties.

What is a DTAA?

A Double Taxation Avoidance Agreement is a treaty between two countries to prevent double taxation of the same income.

What is Foreign Tax Credit (FTC)?

FTC allows taxpayers to offset taxes paid abroad against their Indian tax liability for the same income.

What is the role of Form 67 in FTC claims?

Form 67 is mandatory for claiming FTC and must be filed before submitting the ITR.

Who needs transfer pricing compliance?

Companies or entities engaging in related-party cross-border transactions.

What is the penalty for non-disclosure of foreign assets?

Penalties under the Black Money Act can range from fines to imprisonment for non-compliance.

How is residential status determined for tax purposes?

Based on physical presence in India during the financial year and preceding years under Section 6.

What is withholding tax under Section 195?

TDS deducted on payments to non-residents, such as royalties, technical fees, or dividends.

What is BEPS?

Base Erosion and Profit Shifting (BEPS) is an OECD framework to address tax avoidance by multinational companies.

What is Country-by-Country Reporting (CbCR)?

A BEPS action requiring MNCs to report income, profits, and taxes paid in every country they operate.

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