CA/CMA FINAL| NON RESIDENT TAXATION REVISION |MALAYALAM| NOV/ DEC 2024 EXAMS| CA JOSE KURIAN CLASSES

Non-resident taxation is an important topic in the CA/ CMA Final exam, particularly under the Direct Tax Laws and International Taxation paper. It covers the taxation of individuals and entities who do not reside in India but have income that arises or accrues in India. Here's a summary of key points related to non-resident taxation:

1. Residential Status
Resident: An individual is considered a resident if they meet certain criteria regarding the number of days stayed in India (usually 182 days or more during a financial year).
Non-Resident (NR): An individual is a non-resident if they do not meet the criteria for being a resident.
Resident but Not Ordinarily Resident (RNOR): This status is for individuals who have been non-resident in India for 9 out of the 10 preceding years or have stayed in India for 729 days or less in the preceding 7 years.
2. Scope of Total Income
Resident: Global income is taxable in India.
Non-Resident: Only income that is received, deemed to be received, or accrues/arises in India is taxable in India.
3. Taxable Income for Non-Residents
Income from Business Connection: Income from any business connection in India is taxable.
Income from Property in India: Rent and other income from property located in India are taxable.
Capital Gains: Gains from the transfer of a capital asset situated in India are taxable.
Income from Services Rendered in India: Salaries for services rendered in India are taxable, even if the payment is made outside India.
Interest, Royalty, and Fees for Technical Services: These incomes are taxable in India if paid by an Indian resident or if they relate to a business or profession carried on in India.
4. Tax Deducted at Source (TDS)
Non-residents are subject to TDS at applicable rates on their income arising in India.
5. Double Taxation Avoidance Agreements (DTAA)
India has DTAA agreements with several countries to avoid double taxation of income. Non-residents can claim relief under DTAA, which may allow for lower tax rates or exemptions on certain incomes.
6. Special Provisions for Certain Non-Residents
NRI Income: Special provisions exist for Non-Resident Indians (NRIs) regarding income like investment income, and capital gains from specified assets purchased in foreign exchange.
Foreign Institutional Investors (FIIs): Taxation of FIIs is covered under specific provisions, including capital gains tax.
7. Filing of Return by Non-Residents
Non-residents earning income in India must file their tax returns, declaring all taxable income. They can also claim deductions and reliefs available under the Income Tax Act.
8. Tax Rates for Non-Residents
Non-residents are generally taxed at different rates compared to residents, especially in the case of capital gains and investment income. The applicable rates depend on the nature of the income.
9. Advanced Rulings
Non-residents can seek advance rulings from the Authority for Advance Rulings (AAR) on questions of law or facts in relation to their tax liabilities.
10. Recent Amendments and Case Laws
Staying updated on recent amendments and case laws is crucial for the CA Final exam, as these can impact the taxation of non-residents.
Important Sections to Study:
Section 5: Scope of Total Income
Section 6: Residential Status
Section 9: Income Deemed to Accrue or Arise in India
Sections 115A, 115AC, 115AD: Special provisions relating to non-residents
Section 195: TDS on payments to non-residents
This is a complex topic with many nuances, so thorough understanding and practice are essential to mastering it for the CA Final exam.

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