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International Tax Services — Cross-Border Tax Advisory & Compliance

Expert International Taxation Guidance for Businesses and Individuals with Cross-Border Transactions, Foreign Income & Global Structures

International taxation governs how income, profits, and assets are taxed when they cross national borders — a complex area shaped by domestic tax laws, bilateral tax treaties, OECD guidelines, and evolving anti-avoidance frameworks including the Base Erosion and Profit Shifting (BEPS) project. For Indian businesses operating globally and for foreign companies operating in India, international tax compliance encompasses transfer pricing, permanent establishment analysis, withholding tax obligations, DTAA benefits, and FEMA compliance. For individuals — including NRIs, returning Indians, and expatriates — international tax involves managing dual residency, foreign income reporting, and claiming foreign tax credits to avoid paying tax twice on the same income.

India's international tax framework has been significantly strengthened in recent years — with the introduction of the General Anti-Avoidance Rules (GAAR) in 2017, implementation of the Multilateral Instrument (MLI) amending India's tax treaties, mandatory country-by-country reporting (CbCR) for large multinationals, and enhanced FEMA reporting for overseas transactions. All cross-border structures must be reviewed for compliance with these frameworks. Our international tax services interconnect with DTAA analysis, US tax reporting obligations, LRS remittance compliance, and NRI investment structuring.

Our International Tax Services

Transfer Pricing Advisory & Documentation

Advising on arm's length pricing for international transactions between associated enterprises, preparing transfer pricing documentation (Master File, Local File, CbCR), and defending positions in transfer pricing assessments and Appeals.

DTAA Analysis & Treaty Benefits

Analysing the applicability of India's tax treaties to specific income streams, advising on treaty shopping risks under the MLI's Principal Purpose Test, and preparing documentation for DTAA benefit claims including Tax Residency Certificates.

Expatriate Tax Services

Managing the Indian tax obligations of foreign nationals working in India — including residential status, salary structuring, social security agreements, shadow payroll, and tax equalisation arrangements — and coordinating with home country tax advisors.

Foreign Tax Credit Claims

Computing foreign tax credit available under Section 90/91 of the Income Tax Act for taxes paid in treaty and non-treaty countries, preparing Form 67 for foreign tax credit claims, and ensuring proper documentation of foreign tax payments.

Permanent Establishment Risk Assessment

Evaluating whether a foreign company's India operations — including employees working in India, dependent agents, servers, or project offices — create a taxable PE in India, and advising on risk mitigation strategies.

Section 195 Withholding Tax Advisory

Advising on TDS obligations under Section 195 on payments made to non-residents — including royalties, technical fees, interest, rent, and capital gains — and obtaining lower withholding certificates where DTAA benefits apply.

Key Facts About International Taxation in India

  • India has Double Taxation Avoidance Agreements (DTAAs) with 94+ countries — these treaties override domestic law where more beneficial to the taxpayer under Section 90
  • Transfer pricing rules under Sections 92–92F apply to international transactions between associated enterprises; documentation requirements are stringent and penalties for non-compliance are significant
  • India's General Anti-Avoidance Rules (GAAR) empower the tax authorities to disregard arrangements that lack commercial substance and are primarily tax-motivated
  • The Multilateral Instrument (MLI) has amended many of India's DTAAs to include BEPS minimum standards — including the Principal Purpose Test (PPT) and PE anti-avoidance rules
  • Foreign companies with a Permanent Establishment (PE) in India are taxable in India on profits attributable to that PE at the foreign company tax rate of 40% (plus surcharge and cess)
  • Section 195 requires the Indian payer to withhold tax on all payments to non-residents unless a lower rate is established by DTAA or a lower withholding certificate is obtained from the AO
  • CBDT's Annual Information Statement (AIS) now tracks international wire transfers, TCS on LRS, and foreign asset income — making non-disclosure increasingly high-risk
  • Country-by-Country Reporting (CbCR) is mandatory for Indian multinationals with global revenues exceeding ₹5,500 crore (approximately EUR 750 million)

Frequently Asked Questions

What is international taxation and when does it apply?
International taxation refers to the rules governing how income is taxed when it flows across national borders — covering both the source country (where income originates) and the residence country (where the taxpayer lives or is registered). It applies whenever: (a) an Indian company earns income from overseas operations, customers, or intellectual property; (b) a foreign company earns income from Indian customers, operations, or assets; (c) an Indian individual earns income abroad or holds foreign assets; (d) a foreign national works in India or invests in Indian assets; or (e) a business makes cross-border payments for services, royalties, interest, or dividends. The interplay between domestic tax laws of the two countries — and the applicable tax treaty — determines the actual tax outcome for each transaction or income stream.
How does India tax income earned by foreign companies operating in India?
Foreign companies are taxed in India on income that arises or is deemed to arise in India — including profits attributable to a Permanent Establishment (PE) in India, income from Indian assets, royalties from Indian payers, technical service fees from India, and capital gains on Indian assets. The applicable tax rate for foreign companies is 40% (plus surcharge and cess), which is higher than the domestic company rate. If a foreign company has a PE in India — a fixed place of business, a dependent agent, or a service PE — it must file an Indian income tax return and pay tax on the PE's attributable profits. Tax treaty provisions may limit India's taxing rights on specific income categories (e.g., business profits without PE, shipping income, airline income).
What is a Permanent Establishment (PE) and why does it matter?
A Permanent Establishment (PE) is a fixed place of business through which the business of an enterprise is wholly or partly carried on in a country. The concept is critical in international taxation because a foreign company is generally only taxable in a source country if it has a PE there. Types of PE include: a fixed place PE (office, factory, branch, project site); a dependent agent PE (an agent who habitually concludes contracts in the source country on behalf of the foreign company); a service PE (employees providing services in the source country for more than a specified period); and a construction PE (construction or installation project exceeding a defined duration). India's domestic law contains broad PE definitions, and the MLI has added additional provisions — making PE risk one of the most critical international tax exposures for multinationals operating across borders.
How is transfer pricing regulated in India?
India's transfer pricing regulations under Sections 92–92F of the Income Tax Act require that all international transactions between associated enterprises (AEs) be conducted at arm's length — i.e., at prices that independent parties dealing at arm's length would agree to. The specified arm's length methods are: Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and other prescribed methods. Multinationals with international transactions exceeding ₹100 crore must obtain a Transfer Pricing Accountant's Report (Form 3CEB) from a CA. Adjustments by the Transfer Pricing Officer (TPO) can result in substantial additional tax, interest, and penalties. Indian multinationals with global revenues above ₹5,500 crore also face Master File, Local File, and CbCR obligations.
Can individuals claim foreign tax credit on taxes paid abroad?
Yes. Resident individuals (and resident companies) who have paid income tax in a foreign country on income that is also taxable in India can claim a credit for that foreign tax against their Indian tax liability. For treaty countries, Section 90 applies and the credit is available as per the DTAA provisions. For non-treaty countries, Section 91 provides relief by allowing a deduction for the lower of the Indian tax rate or the foreign country's tax rate on the doubly-taxed income. To claim the foreign tax credit, the taxpayer must file Form 67 before or along with the ITR for the relevant year, providing details of the foreign income and the tax paid in the foreign country. Failure to file Form 67 in time has led to denial of FTC claims in several assessment orders, making timely compliance critical.

Expert International Tax Advisory for India's Cross-Border Needs

Transfer pricing, DTAA benefits, PE analysis, expatriate tax, FTC claims, and Section 195 compliance — comprehensive international tax support.

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