EXEMPTIONS TO NON-RESIDENT INDIAN CITIZEN
(1) Interest on savings certificates [Sec. 10(4B)]. In the case of an individual being a citizen of India or a person of Indian origin who is non-resident any income from interest on notified savings certificates issued before 1.6.2002 by the Central Government is exempt provided he has subscribed to such certificates in convertible foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Regulation Act, 1973, and any rules made there under.
It is to be noted that the exemption will be available to the original subscriber of the savings certificates. The Central Government has notified the National Savings Certificates VI and VII Issues under this clause.
Note : A person shall be deemed to be of Indian origin if he or either of his parents or any of his grandparents, was born in undivided India.
(2) Interest on notified bonds [Sec. 10(15)(iid)]. Interest on such bonds as the Central Government may specify before 1.6.2002 and arising to the following is exempt:
(a) a non-resident India (citizen of India or of Indian origin), being an individual owning the bonds; or
(b) any individual owning the bonds by virtue of a nominee or survivor of the nonresident Indian, or
(c) any individual to whom the bonds have been gifted by the non-resident Indian.
The exemption shall be allowed if the following conditions are satisfied :
(a) Bonds are purchased by a non-resident Indian in foreign exchange.
(b) Interest and principal received on maturity or otherwise, is not allowable to be taken out of India.
(c) Where a non-resident Indian individual becomes a resident in India in any subsequent year the benefit of exemption will continue.
(d) Where the bonds are encashed before maturity, the exemption will not be available in relation to assessment year relevant to the previous year in which the bonds have been encashed.
EXEMPTIONS TO A FOREIGN COMPANY
1. Tax paid by Government or an Indian Concern [Sec. 10(6A)]
The amount of tax paid by Government or an Indian concern on behalf of a foreign company in respect of royalty or fees for technical services paid in pursuance of an agreement made by the foreign company with Government or the Indian concern after 31.3.1976 but before 1.6.2002 the tax so paid will not be included in computing the total income of the foreign company in the following cases :
(a) Where such agreement relates a subject-matter which is included in the industrial policy, if the said agreement is in accordance with the industrial policy of the Government of India;
(b) In any other case the agreement is approved by the Central Government.
2. Tax paid by Government or an Indian Concern [Sec. 10(6B)]
The amount of tax paid by Government or an Indian concern on behalf of a non-resident or a foreign company in respect of its income (not being salary, royalty or fees for technical services) will not be included in computing the total income of such nonresident or foreign company :
(a) Where such income is arising in pursuance of an agreement entered between the Central Government and the government of a foreign state or an international organisation before 1.6.2002.
(b) The tax is paid under the terms of that agreement or any related agreement which has been approved by the Central Government before 1.6.2002.
3. Tax paid by an Indian Company [Sec. 10(6BB)]
The amount of tax paid by an Indian Company engaged in the business of operation of aircraft, on behalf of the Government of a foreign state or foreign enterprise (a non resident person) shall not be included in the income provided :
(i) The income is derived from leasing an aircraft or an aircraft engine (excluding the payment for providing spares, facilities or services in connection with the operation of leased aircraft) under an agreement entered
(a) after 31.3.1997 but before 1.4.1999; or
(b) after 31.3.2007 and approved by the Central Government,
(ii) The tax is paid by the Indian Company under the terms of agreement to the Central Government.
4. Income by way of royalty or fees for technical services [Sec. 10(6C)]
Any income arising to such foreign company (as may be notified by the Central Government) by way of royalty or fees for technical services received-in pursuance of an agreement entered into with the Central Government for providing services in India or outside India in projects connected with-security of India.
1. An individual being a citizen of India, who is planning to go out of India for employment purposes or as a member of the crew of an Indian ship, he should leave the country before he completes his stay of 182 days during the relevant previous year so that he becomes non-resident in India and enjoys exemption on foreign incomes.
2. An individual, being a citizen of India or of Indian origin, who has been staying out of India and wants to visit India, he should see that he does not stay in India during the previous year for more than 181 days. If he wishes to stay in India for more than 181 days (but not exceeding 362 days) at a stretch and without incurring additional tax liability, he should plan his stay in India in such a way that the period of stay falls in two previous years, i.e., the stay not exceeding 181 day.« in one previous year and not exceeding 181 days in the following previous year.
3. Any other individual can plan his a-tay in India upto 181 days during the previous year and still maintain his residential status as a 'non-resident' provided his stay during four years preceding the previous year does not exceed 364 days.
If his stay during four years preceding the previous year exceeds 364 days, he should not stay in India during previous year for exceeding 59 days otherwise he would loose the status of no,-resident'. If he wants to stay in India for more than 59 days (but not more than 118 days) at a stretch, he should plan his stay not exceeding 59 days in one previous year and not exceeding 59 days in the following previous year.
4. A Hindu Undivided Family, Firm or Association of Persons becomes resident in India if even a part of its management and control is situated in India, To avoid such a situation that the firm becomes resident in more than one country at a time, a part of the management and control should not be situated in India.
5. Income received in India is taxable in the hands of resident, not ordinarily resident and non-resident. But the foreign income is not taxable in India if it is not received in India and the assessee is non-resident in India. Hence, the non-resident persons should receive foreign income outside India and then remit to India. Thus they will save tax on their foreign income.
6. Goods should be sold by a non-resident (foreigner) to a resident in India on principal to principal basis and the consideration of such sales must be directly received in the nonresident's foreign country. In such a case it cannot be said that there is any business
connection between the non-resident seller and the resident importer.
7. A non-resident Indian or his nominee or an individual who has received the bonds (purchased in foreign currency) as a gift from a non-resident Indian, should not encash such bonds just at the end of the previous year. If these are encashed before maturity, the exemption u/s 10(15)(iid) for that year will not be available.
8. Deductions under sections 80DD, 80DDB, 80QQB, 80RRB and 80U are not available to a foreign company or a non-resident in India. If such person has negligible foreign income which is not liable to tax in India, but has such incomes on which deductions are
available under one or more sections specified above, he should try to become resident in India so that he may avail the deductions from gross total income and reduce his tax liability.
9. Anon-resident Indian should exercise the option u/s 1151, whether he should be assessed under sections 115C to 115H or not. In certain cases the tax liability is less when he is assessed under sections 115C to 115H and in certain cases when he is assessed under general law.
10. Where a non-Indian company is earning substantial income in India but suffering losses outside India, it may plan to become resident in India. In such a case the company will be able to set-off its foreign losses against Indian income.