Frequently Asked Questions 1. What is international taxation? International taxation refers to the rules and treaties that determine how income, profits, and assets are taxed when they cross borders — whether you are an individual living abroad, an Indian company operating overseas, or a foreign business earning revenue in India. Who does it apply to? Non-Resident Indians (NRIs) with income or assets in India or abroad Indian companies with overseas subsidiaries, branches, or joint ventures Foreign companies earning income in India through business operations, investments, or services Indian professionals working in the US, UK, UAE, or other countries on employment or business visas Why it matters: Cross-border tax laws are complex, often overlap, and change frequently. Without professional guidance, you risk double taxation, missed treaty benefits, non-compliance penalties, and regulatory scrutiny across multiple jurisdictions. Expert advice ensures you stay compliant while minimising your global tax burden legally. 2. How can BC Shetty & Co help with international taxation? With over 40 years of practice and a trusted client base across India and abroad, BC Shetty & Co is a Bangalore-based chartered accountancy firm with deep expertise in cross-border tax advisory. We work with NRIs, Indian multinationals, and foreign companies to simplify international tax compliance and maximise legitimate tax efficiency. What we do for you Legally reduce your tax liability across borders using applicable Double Taxation Avoidance Agreements (DTAAs) Structure your overseas investments and business operations for maximum tax efficiency and regulatory clarity Keep you compliant with Indian Income Tax, FEMA, RBI, and foreign jurisdiction requirements — all coordinated under one roof Represent and support you through transfer pricing audits, tax assessments, and regulatory inquiries Handle end-to-end cross-border tax planning, return filing, and advisory for individuals and corporates Clients we serve NRIs managing income, investments, or property in India Indian multinationals with overseas subsidiaries or foreign operations Foreign companies with business presence or income sources in India US-based Indian professionals — H1B holders, Green Card holders, students, and returning NRIs 3. What are transfer pricing services? Transfer pricing is the process of determining the price at which goods, services, funds, or intellectual property are exchanged between related companies across different countries — for example, between an Indian parent company and its foreign subsidiary. Under the Income Tax Act, 2025 and the Income Tax Rules, 2026, these transactions must be conducted at Arm's Length Price (ALP) — that is, at the price that two unrelated parties would agree upon in an open market. Why it matters: Tax authorities in both countries scrutinise related-party transactions intensely. If pricing is seen as inflated or deflated to shift profits to a lower-tax jurisdiction, it can trigger transfer pricing adjustments — sometimes running into crores — along with interest and steep penalties. Penalties for non-compliance: 2% penalty on the value of each international transaction where documentation is inadequate 100–300% penalty on the under-reported tax amount if ALP adjustment is made Mandatory referral to Transfer Pricing Officer (TPO) if transaction value exceeds the prescribed threshold What BC Shetty & Co does: Preparation of robust Transfer Pricing Documentation (Form 48 and supporting records) as mandated under the Income Tax Rules, 2026 Benchmarking studies using comparable uncontrolled transactions to establish and defend ALP Selection and application of the most appropriate transfer pricing method (CUP, TNMM, RPM, PSM, etc.) Representation and support during Transfer Pricing audits and assessment proceedings before the TPO and DRP Advance Pricing Agreement (APA) guidance to provide certainty on transfer pricing for future transactions Who needs transfer pricing services? Any company with a foreign parent, overseas subsidiary, joint venture partner, or associated enterprise that transacts across borders — whether in goods, services, financing, or IP licensing — is required to comply with India's transfer pricing regulations. 4. What international tax services are available for US companies in India? US companies operating in India — whether through a subsidiary, liaison office, project office, or as a direct earner of India-sourced income — face a specific set of cross-border tax challenges. BC Shetty & Co provides specialist support in the following areas: Outward Remittances from India to the US When an Indian entity remits funds to a US parent or associate — as dividends, royalties, fees for technical services, interest, or management charges — it must: Deduct TDS at the applicable DTAA rate (India-US treaty rates are typically lower than domestic withholding rates) File Form 145/146 (CA certificate) before remitting funds abroad Ensure the transaction is correctly categorised under the Income Tax Act, 2025 and FEMA BC Shetty & Co assists with end-to-end outward remittance compliance — from determining the correct TDS rate and treaty applicability to issuing 146 certificates and advising on FEMA reporting. Inward Remittances into India from the US When a US company invests in or lends to its Indian entity, the inward flow must be properly structured and reported: Foreign Direct Investment (FDI) routed under the automatic or approval route, with FC-GPR filings on the FIRMS portal External Commercial Borrowing (ECB) filings with the RBI Royalty, service fee, and IP licensing agreements must meet both FEMA and Income Tax Act pricing norms 5. What is FEMA compliance? The Foreign Exchange Management Act (FEMA) governs how money, assets, and investments move in and out of India. Whether you're an NRI repatriating funds, a foreign company investing in India, or an Indian business expanding abroad — FEMA compliance is mandatory and non-negotiable. Common FEMA scenarios our clients face Purchasing property abroad or receiving rental income from foreign assets Sending money overseas (Liberalised Remittance Scheme — LRS) for investment, education, or maintenance Foreign Direct Investment (FDI) into an Indian company — equity, compulsorily convertible instruments, or hybrid structures NRI repatriation of funds — moving money from NRO to NRE accounts or abroad Overseas Direct Investment (ODI) by Indian individuals or companies in foreign entities Consequences of FEMA non-compliance FEMA violations are taken seriously by the RBI and the Enforcement Directorate (ED). Non-compliance can result in: Compounding proceedings — civil penalties for regularising past violations Monetary penalties up to 3x the amount involved RBI scrutiny, freezing of accounts, and legal proceedings in serious cases What BC Shetty & Co handles FDI filings — FC-GPR (foreign equity issuance), FC-TRS (share transfer), and FCTRS reporting Overseas Direct Investment (ODI) filings and structuring Share transfer transactions between residents and non-residents RBI approvals — obtaining special permissions for transactions outside the automatic route Annual compliance filings — FLA returns and mandatory disclosures NRI repatriation advisory — structuring and executing tax-efficient fund transfers Compounding applications — regularising historical FEMA violations with the RBI