Foreign vendors paid by Indian customers
- Indian payers must withhold tax on many payments to non-residents under section 393(2) of the Income-tax Act, 2025 — royalties and fees for technical services at 20% (plus surcharge and cess) under domestic law.
- Your tax treaty usually cuts that to 10–15%, or to nil for business profits where you have no permanent establishment in India — but only with the right documents: a tax residency certificate, Form 41 (formerly Form 10F), a no-PE declaration and often a PAN.
- The payer files Form 145 and, for most payments, a CA certificate in Form 146 before remitting.
- We prepare your pack once a year and explain it to your Indian customers’ finance teams. Guide: Form 41, TRC and the no-PE declaration.
Permanent establishment reviews
- Staff, contractors or an office in India can create a taxable presence — a permanent establishment — even without an Indian entity.
- India also taxes non-residents with a significant economic presence (₹2 crore of payments or 3 lakh users), though a treaty’s PE rules generally prevail.
- We review how your people, contracts and servers touch India and suggest fixes. See hiring in India without an entity.
Do you need to file in India?
- A foreign company with income taxable in India generally files an Indian return.
- The exception: if its only Indian income is dividends, certain interest, royalties or fees for technical services and tax was withheld at no less than the domestic rates. If your customer applied a lower treaty rate, the exemption usually doesn’t apply — a common surprise.
- Refunds of excess withholding, lower-withholding certificates (Form 128) and PAN applications for foreign companies are routine work for us.
GST for foreign SaaS and digital services
Selling online services to Indian consumers or unregistered businesses? You likely need a simplified GST registration and monthly returns; sales to GST-registered businesses are taxed under reverse charge. The equalisation levy no longer applies. Guide: GST for foreign SaaS selling into India.
How we work with clients abroad
- Fully remote: engagement letter and NDA by e-signature, data through your virtual data room or a shared drive, calls on your time zone (US mornings, Europe and Gulf afternoons, Japan and Singapore mornings IST).
- In English, in writing: every finding is referenced to a document or a public record, so your board, lawyers or auditors can rely on it.
- On the ground when needed: offices in Ahmedabad, Mumbai, Bengaluru, Rajkot and Dubai for site visits, bank meetings and management interviews.
- Clear scope: CA work — accounting, tax, FEMA and corporate filings. Legal opinions come from your lawyers; we work alongside them.
Frequently asked questions
Why is my Indian customer deducting tax from my invoice?
Indian law requires payers to withhold tax on many payments to non-residents, such as royalties and fees for technical services. With a tax residency certificate, Form 41 and other documents, the lower rate in your country's treaty — or nil, for business profits without a permanent establishment — can usually be applied.
What replaced Form 10F in India?
From 1 April 2026, under the Income-tax Rules 2026, the treaty-relief information form is Form 41. It is filed online and supports the tax residency certificate.
Does a foreign company need a PAN in India?
It needs one to file an Indian return or apply for a lower-withholding certificate, and many Indian payers ask for one; without a PAN, withholding can be at a higher rate unless prescribed details are provided.
Does a foreign company have to file an income tax return in India?
Generally yes if it has income taxable in India. It is exempt only where its Indian income is limited to dividends, certain interest, royalties or technical fees and tax was withheld at not less than the domestic rates.