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 FAQS Relating To Education Cess And Sequrities Transaction Tax
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19. Is Non Resident eligible for claiming rebate for repayment of the principal amount of loan taken by him?
Ans. A Non-Resident will be entitled to a claim a rebate against the tax payable on his total income, if he makes payment or deposits made towards repayment of the amount borrowed by him from -
(1) the Central Government or any State Government, or
(2) any bank, including co-operative bank, or
(3) the LIC, or
(4) the National Housing Board, or
(5) any public company formed and registered in India with an object of carrying business or profession of providing long term finance for construction of houses in India for residential purposes, or
(6) any public company in which public are substantially interested or any co-operative society, where such company or co-operative society is engaged in business of financing the construction of houses, or
(7) his employer, where such employer is a public company or a public sector company or a University established by law or a college affiliated to such University or a local authority or a co-operative society.
However, no rebate can be claimed on any repayment of loan taken from a person other than those mentioned above.
FAQS RELATING TO ROYALTY INCOME OF NON-RESIDENTS
20. How is Royalty income of a non-resident charged to tax?
Ans. The Royalty Income will be charged to tax as business income of the Non Resident if the following conditions are fulfilled:
(a) the royalty income is received from the Government or an Indian concern;
(b) such royalty is received in pursuance of an agreement entered into after 31st January, 2003;
(c) such non-resident carries on a business/profession in India through a permanent establishment or a fixed place;
(d) the right/property/contract, in respect of which royalty is received, is effectively connected to such permanent establishment or fixed base.
21. Are all expenses/payments deductible from such royalty income?
Ans. No. The following expenses are not deductible:
(a) the expenses which are not incurred wholly & exclusively for the business of the permanent establishment or a fixed place of business;
(b) amounts paid (not being reimbursement of actual expenses) by the permanent establishment to its head office.
FAQS RELATING TO AGENT OF NON-RESIDENT
22. Can the income of a non-resident be assessed in the hands of his agent? Ans. Yes, the income of a non-resident may be assessed, by the Income-tax Department, in the hands of his agent. In such a case, the agent will be treated as a representative assessee of the non-resident.
23. Who can be deemed to be an agent of the non-resident?
Ans. The following persons can be deemed to be an agent of the non-resident:
(a) a person employed, whether directly or on behalf of the non-resident;
(b) a person who has business connection with a non-resident;
(c) a person from/through whom the non-resident receives any income, directly or indirectly;
(d) a person who is the trustee of the non-resident;
(e) any person who has acquired a capital asset in India by means of a transfer.
However, no person can be treated as an agent of the non-resident, unless he is given an opportunity of being heard first to prove/disprove his liability of being treated as such.
24. Is an Indian broker dealing with or entering into a transaction with the non-resident broker deemed to be his agent? Ans. An Indian broker dealing with non-resident broker will not be deemed to be his agent in respect of transactions with him, if the following conditions are satisfied:
(a) the transactions are carried on in the ordinary course of such Indian broker's business;
(b) the non-resident broker also enters into such transactions in ordinary course of his business.
25. Can an agent sign the Return of Income of the non-resident?
Ans. The agent of a non-resident may sign his Return of Income if the following conditions are satisfied:
(a) such agent is authorized by the non-resident to sign his Return of Income by means of a valid power of attorney issued by the non-resident in this behalf;
(b) the power of attorney is attached with Return of Income of such non-resident.
26. Can a representative assessee recover from the non-resident, the tax paid by him on the latter's behalf?
Ans. The representative assessee, who has paid tax on behalf of the non-resident, is entitled to recover such sum from him. He is also entitled to retain such sum from any moneys in his possession or which he may receive in his representative capacity.
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