Frequently Asked Questions (FAQs)
Q. What is Section 5A of the Income Tax Act?
A. Section 5A of the Income Tax Act deals with the taxation of income earned by a non-resident from a business connection in India.
Q. Who is a non-resident?
A. A non-resident is an individual who does not meet the criteria for being a resident as per the Income Tax Act. Generally, an individual is considered a non-resident if they stay in India for less than 182 days in a financial year.
Grow your business with Marg ERP! Easy GST invoices and filing.
Q. What is a business connection?
A. A business connection can be defined as any business activity carried out by a non-resident in India, either directly or indirectly.
Q. Is all income earned by a non-resident from a business connection in India taxable?
A. Yes, all income earned by a non-resident from a business connection in India is taxable under Section 5A of the Income Tax Act.
Q. What is Tax Deducted at Source (TDS)?
A. Tax Deducted at Source (TDS) is the tax that is deducted by the payer of the income before making the payment. The payer is required to deposit this tax with the government within the prescribed timeline.
Q. Are non-residents eligible for deductions and exemptions available to residents?
A. No, non-residents are not eligible for certain deductions and exemptions available to residents.
Q. Can non-residents avail benefits provided under the tax treaty between India and their country of residence?
A. Yes, non-residents can avail of the benefits provided under the tax treaty between India and their country of residence.
Q. What is the tax rate applicable to non-residents under Section 5A?
A. The tax rate applicable to non-residents under Section 5A is the same as that for residents. However, non-residents are not eligible for certain deductions and exemptions available to residents.
Q. What is the implication of Section 5A for taxpayers?
A. Non-residents who have a business connection in India need to comply with the provisions of Section 5A. They need to file their tax returns and pay taxes on their income earned in India. Payers of income earned by non-residents need to comply with the provisions of TDS and deposit tax with the government within the prescribed timeline.
Q. Can non-residents claim deductions and exemptions available under the Income Tax Act?
A. Non-residents are not eligible for certain deductions and exemptions available to residents. However, they can explore the possibility of claiming deductions and exemptions available under the Income Tax Act.
