Section 9D of the Income Tax Act is a crucial provision that affects non-residents who earn income in India. This provision defines the scope of income that is taxable in India, and it is important for non-residents to understand its implications to avoid any tax-related complications.
What is Section 9D of the Income Tax Act?
Section 9D of the Income Tax Act was introduced in the Finance Act 2010 and became effective from 1st April 2011. This section applies to non-residents who earn income from any source in India, and it specifies the circumstances under which such income is taxable in India.
According to Section 9D, any income that arises from the transfer of a capital asset located in India is taxable in India, regardless of the non-resident’s residence status. This provision applies to all non-residents, irrespective of their nationality or country of residence.
Implications for Non-Residents
The provisions of Section 9D have significant implications for non-residents earning income in India. For example, if a non-resident sells a property located in India, the capital gains earned from such a sale will be taxable in India under Section 9D. Similarly, if a non-resident sells shares of an Indian company, the capital gains earned from such a sale will also be taxable in India.
Moreover, it is important to note that Section 9D does not apply only to direct transfers of capital assets. It also applies to indirect transfers, i.e., transfers made through a sale or transfer of shares or interest in an entity that holds such capital assets in India. Such transfers are also subject to tax in India if they meet the criteria specified in Section 9D.
Compliance Requirements
Non-residents earning income in India must comply with the provisions of Section 9D to avoid any tax-related issues. Non-compliance with this section can result in penalties and interest, and in extreme cases, it can also lead to prosecution.
To comply with Section 9D, non-residents must obtain a Permanent Account Number (PAN) and file their income tax returns in India. They must also pay the tax due on their income earned in India within the stipulated time frame.
Conclusion
Section 9D of the Income Tax Act has significant implications for non-residents earning income in India. It is important for non-residents to understand the provisions of this section and comply with its requirements to avoid any tax-related complications. Non-residents should seek professional advice to ensure they meet their compliance obligations and avoid any penalties or legal issues.
Read more useful content:
- section 234e of income tax act
- section 286 of income tax act
- section 90a of income tax act
- section 40a(7) of income tax act
- section 226(3) of income tax act
- section 24 of income tax act
Frequently Asked Questions (FAQs)
Q. What is Section 9D of the Income Tax Act?
Section 9D of the Income Tax Act is a provision that specifies the circumstances under which non-residents earning income in India are liable to pay tax on such income.
Q. Who does Section 9D apply to?
Section 9D applies to non-residents who earn income from any source in India, irrespective of their nationality or country of residence.
Q. What income is taxable under Section 9D?
Any income that arises from the transfer of a capital asset located in India is taxable under Section 9D. This includes both direct and indirect transfers of such assets.
Q. What is an indirect transfer of a capital asset?
An indirect transfer of a capital asset is one that is made through the sale or transfer of shares or interest in an entity that holds such capital assets in India.
Q. How does Section 9D affect non-residents selling property in India?
If a non-resident sells a property located in India, the capital gains earned from such a sale will be taxable in India under Section 9D.
Q. Do non-residents need to file tax returns in India under Section 9D?
Yes, non-residents earning income in India under Section 9D are required to file their tax returns in India and pay the tax due on such income within the stipulated time frame.
Q. What are the consequences of non-compliance with Section 9D?
Non-compliance with Section 9D can result in penalties, interest, and even prosecution in extreme cases.
Q. Can non-residents seek professional advice to comply with Section 9D?
Yes, non-residents can seek professional advice from tax consultants or lawyers to ensure they meet their compliance obligations under Section 9D and avoid any penalties or legal issues.
