India Tax Treaties with China

India has signed Double Taxation Avoidance Agreements (DTAA) with China.
In India, transactions involving persons having interest between countries with which India has a DTAA, there are agreed rates of tax and jurisdiction on specified types of income.
Therefore, tax relief is provided for those person residents from China.
Evershine provides China Parent company to apply for tax relief according to DTAA between India and China.

Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi , speak in Indian and English.
Skype: cspunitnegi

CN-Q-10:
中國母公司在印度是否可以依DTA申請沒有常設機構(PE)下零稅率?
China Parent Company, can apply for zero tax rate without PE under DTA in India?

CN-A-10:

Yes.
China has DTA with India, and if China Legal Resident company is without PE (Permanent Establishment), it will be redeemed as “non-India Domestic Sourced Income”.
That means India will levy zero-tax.
However, China Legal Resident company still needs to send zero-tax application to India Tax Bureau for being approved.
That means if an India Subsidiary pays a service fee to a non-India Parent Company through a service contract signed between a subsidiary and non -India Parent company
as an investor, non-India Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by India Tax Bureau.

CN-Q-20:

中國母公司在印度設立了印度子公司，中國母公司替子公司服務收入能否申請零稅率?
When China Parent Company as an Investor, set up an India subsidiary, and provide services from China to India Subsidiary, can apply for zero tax rate without PE under DTA in India?

CN-A-20:
According to DTA Article 5 item 7, A India subsidiary will not be treated as PE of China Parent company as an investor because it is a separate legal entity.
That means if an India Subsidiary pay a service fee to China Parent Company through service contract signed between subsidiary and China Parent company
as an investor, China Parent Company can apply zero tax.
As for if the paid amount is reasonable, it will get involved TP (Transfer Pricing) judgment by India Tax Bureau.

CN-Q-30:  

印度依DTA沒有PE下零稅率申請的程序為何?
 What is the procedure for India to apply for a zero tax rate under DTAA without PE?

CN-A-30:
Non-resident in India who wishes to avail treaty benefits are required to furnish the following to the Indian Company (Tax deductor) and they will file to the tax bureau.

1. Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
2. A No PE declaration letter (prescribed format), to prove the Foreign Company does not have a “PE” in India.

CN-Q-40:
中國母公司有印度來源所得的各項所得扣繳稅率為何?
When China Resident company having India domestic sourced income, what are the withholding tax rates for various incomes in India?

CN-A-40:
China has DTA with India, and if you are with PE (Permanent Establishment) in India, your income will be considered as India domestic sourced income.
As for levying Tax Rate, please be aware:
if India Tax rate > DTA Rate, adopt DTA Rate; if India Tax rate < DTA Rate, adopt India Rate.
If DTA is applied, the DTA rates between China and India are as below:

*The withholding tax rate under domestic law may apply rather than the treaty rate where the domestic law rate is lower than the treaty rate.
*No tax is imposed on dividends paid to nonresident corporations under Indian domestic law.

CN-Q-50
當中國稅務居民有印度來源所得，依DTA優惠稅率申請的程序為何?
When China Tax Resident having India domestic sourced income, what is India’s application procedure based on the DTA preferential tax rate?

CN-A-50:
Non-resident in India who wishes to avail treaty benefits are required to furnish the following to the Indian Company (Tax deductor) and they will file to the tax bureau.

1. Tax Residency Certificate (TRC) from the country in which the non-resident is the resident.
2. A No PE declaration letter (prescribed format), to prove the Foreign Company does not have a “PE” in India.

Summary of TAX TREATY between India and CHINA
The Government of the People’s Republic of China and the Government of the Republic of India concluded and signed an Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Double Taxation Avoidance Agreements, DTAA), on 21 November 1994.
Notification No. S.O. 2562(E) [No.54/2019/F.No. 503/02/2008-FTD-II] (refer as Protocol), the amendment to the DTAA dated 17 July 2019 was signed.

Permanent Establishment

Article 5 states the term permanent establishment (PE) means a fixed place of business which generally includes the followings:
*A place of management
*A branch
*An office
*A factory
*A workshop
*The furnishing of services through employees or other personnel for periods aggregating more than 183 days.

Withholding Tax

*Article 7 of DTAA between India and China explained, an enterprise shall not be taxed on business profits unless it is attributable to the permanent establishment situated in the relevant territory.

*In the Article 10, dividends paid by an Indian Resident enterprise to China Resident enterprise (and vice versa), the tax so charged shall not exceeding 10% of the gross dividends.

*Article 11 states that where the beneficial owner of the interest (exclude exempted interest) is a non-resident, shall be taxed in the territory in which it arises at the rate not exceeding 10% of the gross interest.

*Article 12 explained royalties means payment for the use of, right to use, copyright of literary, artistic, or scientific work or equipment, information concerning industrial, commercial, or scientific experience.

*Technical services in Article 12 include managerial, technical, or consultancy services. Payment for royalties and technical services are taxed at 10% respectively.

* Professional services or other activities provided by an individual of an independent character were explained in Article 14.
India may not tax payments for professional service rendered by a China resident unless the China resident has a fixed place or stay in India for 183 days or more.
An independent profession includes physicians, lawyers, engineers, architects, dentists, and accountants.

Elimination of Double Taxation

Article 23 of the DTAA states that double taxation shall be eliminated by allowing tax credit to be made available to the home resident territory.
It shall be credited against the tax levied in the first-mentioned territory on that resident.
However, the amount of credit shall not exceed the amount of the tax in the first-mentioned territory.

Exchange of Information

Article 26 states that the competent authorities of the territories shall exchange such information (including documents or certified copies of the documents) relevant to the provision of this Agreement.

Please be aware  below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us
New Delhi Evershine BPO Service Limited Corp.
Email: bom4ww@evershinecpa.com
A-16, 1st Floor, Aruna Asaf Ali Marg, Qutub Institutional Area, New Delhi, 110067, India
Manager Punit Singh Negi, speak in Indian and English.
Skype: cspunitnegi
or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4bom@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address: Dale Chen

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(version: 2024/07)

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