India’s growing economy presents vast opportunities for international businesses. However, navigating the Indian income tax system is essential for maintaining profitability and legal compliance. If your company operates in India—whether through a subsidiary, liaison office, or project office—it must manage its income tax obligations diligently to avoid costly consequences.
At Jain Prachi & Company, we offer comprehensive income tax planning and advisory services tailored specifically for non-resident companies and foreign-owned Indian subsidiaries, ensuring complete compliance and optimal tax efficiency under Indian tax laws.
Do Non-Resident Companies Have to Pay Tax in India?
Yes. If a non-resident company earns income in India, directly or indirectly, it is liable to pay tax under the Income Tax Act, 1961. The taxability depends on the following:
Source of income
(business operations, services, dividends, capital gains, royalties)
Permanent Establishment (PE)
in India
Type of presence
– Liaison Office, Branch Office, Project Office, or Subsidiary
Double Taxation Avoidance Agreement (DTAA)
between India and the company’s home country
We assist companies in determining tax residency, evaluating PE status, and applying relevant DTAA provisions to avoid double taxation.
Key Income Tax Obligations for Non-Resident Companies in India
Filing of Corporate Income Tax Return (ITR-6)
Every foreign company or subsidiary earning taxable income in India must file an annual ITR. Even companies operating at a loss are required to file returns.
- Due Date: 31st October of the assessment year
- Penalty for non-compliance: Up to ₹10,000 plus interest
We ensure timely filing of accurate tax returns along with necessary disclosures under transfer pricing, TDS, and foreign payments.
Withholding Tax (TDS) on Payments to Non-Residents
Indian companies making payments (interest, royalties, technical fees) to foreign entities must deduct tax at source and deposit it with the government.
- TDS rates vary based on the nature of payment and DTAA
- Non-deduction or short deduction attracts disallowance of expense and penalties
Jain Prachi & Company helps you identify TDS applicability and manage withholding compliance, including lower/nil deduction certificates under Section 195.
Tax Audit (Section 44AB)
If the gross receipts or turnover exceeds ₹1 crore (₹10 crore for digital transactions), a tax audit is mandatory. This is common for Indian subsidiaries with foreign shareholding or high-volume operations.
- Audit due date: 30th September of the assessment year
- Detailed disclosures, depreciation, expense classification, and related-party transactions are scrutinised
We conduct the audit in compliance with Indian standards and help prepare the Form 3CD report for filing.
Tax Planning Strategies for Foreign Businesses in India
At Jain Prachi & Company, we go beyond filing returns. We offer strategic tax planning for non-resident companies to:
- Optimise tax exposure through DTAA
- Evaluate transfer pricing risks and prepare documentation
- Apply for PAN, TAN, and tax registrations
- Repatriate profits with tax efficiency
- Structure inter-company transactions to avoid disallowance
- Claim foreign tax credits (FTC) if applicable
Proper planning ensures your company maximises profits while complying with Indian regulations.
Applicable Tax Rates for Non-Resident Companies
Company Type | Corporate Tax Rate (FY 2024-25) | Surcharge & Cess | Notes |
Foreign Company | 40% | +2% to 5% | Based on income slab |
Indian Subsidiary (Domestic Co.) | 22% to 30% | +Surcharge & Cess | Depends on turnover & exemptions |
Royalty/FTS Income | 10% or DTAA Rate | As per DTAA | Lower rate may apply under DTAA |
We ensure that your tax planning considers the lowest applicable tax rates under Indian law or treaty benefits.
Transfer Pricing Compliance for Non-Resident Companies
If your Indian entity engages in transactions with an overseas parent or associated enterprise, it must comply with transfer pricing laws.
- Documentation required under Rule 10D
- Form 3CEB filed along with the tax return
- Independent benchmarking of pricing essential
Our expert team prepares robust TP reports and handles assessments and disputes with the tax department, if any.
Why Choose Jain Prachi & Company for Income Tax Services
- 100% compliance track record for foreign clients
- Expertise in cross-border tax planning and DTAA application
- End-to-end services: PAN, TAN, TDS, ITR, Transfer Pricing, Tax Audit
- Strategic advisory for repatriation, intercompany pricing, and tax credits
- Real-time communication and compliance calendar management
Need Expert Tax Planning for Your Business in India?
Jain Prachi & Company simplifies your Indian tax responsibilities with a personalised approach for globally owned entities. Let us handle your filings, tax planning, and cross-border structuring while you focus on growing your business.
Email: contactus@jainprachi.com
Website: https://jainprachi.com
FAQs: Taxation of Non-Resident Companies in India
Q: Does a foreign company without a physical office in India need to pay tax?
Yes, if it earns income from India or has a permanent establishment, it may be liable to pay tax.
Q: Can DTAA reduce tax liability?
Yes, DTAA allows for lower tax rates or exemptions on certain income types like royalties, fees, and dividends.
Q: What documents are required for income tax filing?
Audited financials, TDS returns, PAN, board resolutions, and TP documentation (if applicable).
