Foreign companies operating in India should carefully structure their operations with an eye on the tax collector. Shutting down a permanent establishement (PE) does not necessarily allow companies to avoid taxes in India if their proceeds are linked to a PE, even one that has already been shut down.
Partner
K.R. Chawla & Co
A non-resident or foreign company is treated as having a PE or business connection in India under Article 5 of the Double Taxation Avoidance Agreements (DTAA) or under Section 9 of the Income-tax Act, 1961, if it carries on business in India through a branch or sales office, or through an agent (other than an independent agent).
To qualify as a PE, the branch or agent should habitually exercise authority to conclude contracts, deliver goods or merchandise or regularly secure orders in India on behalf of the non-resident principal.
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Sumes Dewan is a partner at KR Chawla & Co Advocates & Legal Consultants. The firm is headquartered in New Delhi and has offices in Chennai and Bangalore as well as a representative office in Singapore.
Head Office
7th Floor, Kailash Building
26, Kasturba Gandhi Marg
New Delhi – 110 001
India
Tel: +91 11 2335 7658-61
Fax: +91 11 2331 9997
Email: krclo@krcco.com
Singapore
9 Temasek Boulevard
#32-01 Suntec Tower 2
Singapore – 038989
Tel: +65 6432 5220
Fax: +65 6332 1485
Email: krlcosingapore@krcco.com
