{"id":1231,"date":"2021-06-04T07:24:29","date_gmt":"2021-06-04T07:24:29","guid":{"rendered":"https:\/\/www.theirmindia.org\/blog\/?p=1231"},"modified":"2026-02-23T17:21:50","modified_gmt":"2026-02-23T17:21:50","slug":"international-tax-and-risk-management-a-beginners-toolkit","status":"publish","type":"post","link":"https:\/\/www.theirmindia.org\/blog\/international-tax-and-risk-management-a-beginners-toolkit\/","title":{"rendered":"International Tax and Risk Management: A Beginner\u2019s Toolkit"},"content":{"rendered":"

\"Getting<\/a><\/p>\n

Tax management has assumed significant importance in boardroom discussions. Not only are tax laws mired in complexity, but they also account for a significant cost for companies. Risk management<\/a><\/strong><\/em>, therefore, becomes critical given the onerous compliances and the potential implications that could result if tax positions are not carefully assessed and managed.<\/p>\n

With globalisation and digitalisation taking center stage in the world economy, interactions between countries have increased multifold. The humongous magnitude of cross-border transactions brings its own set of cross-border tax issues which one needs to be mindful of with the help of international tax risk management.<\/p>\n

The following paragraphs highlight some of the key international tax issues and the role each of them plays in risk management:<\/p>\n

    \n
  1. Can a non-resident be subjected to tax in India? <\/strong><\/li>\n<\/ol>\n

    In simple terms, a non-resident is liable to tax in India if they earn income from India. Whilst certain streams of income (such as dividends, interest, royalties, technical fees) are taxable in India if the payer is in India (without the non-resident having a physical presence in India), the business income of a non-resident is typically taxable in India only if the non-resident has a physical presence in India.<\/p>\n

    The distinction of whether the non-resident carries on \u201cbusiness with India\u201d or \u201cbusiness in India\u201d is of importance as a tax liability in India would arise in the case of the latter and not the former. For example, a non-resident exporting their goods to India may not be taxable in India whereas a non-resident who sells goods in India through its branch or subsidiary or agents in India could potentially be liable to be taxed in India.<\/p>\n

      \n
    1. Withholding taxes<\/strong><\/li>\n<\/ol>\n

      According to the Indian tax laws, any sum payable to a non-resident which is chargeable to tax in India is liable for deduction of tax at source (\u2018TDS\u2019). Thus, two things are very important to be determined\u2013
      \n(i) whether the sum payable to the non-resident is chargeable to tax in India; and (ii) the applicable rate of TDS.<\/p>\n

      Both these issues are critical, and their assessment requires evaluation of several parameters such as:<\/p>\n