What constitutes a permanent establishment in India?

What constitutes a permanent establishment in India?

If the place of business is located in the business premises of another company and the foreign company has access to a portion of those premises on a regular basis, the premises may be considered to have a PE in India. A proper commercial activity must be carried out from such a set location.

How is a PE taxed in India?

Once it is determined that a foreign firm has a PE in India, profits linked to its activities in India will be taxed as “Business Income” in accordance with Article 7 of the treaties. They must apply for PAN, TAN and should be registered under regulations of Indirect tax.

How many types of permanent establishment are there?

There are three types of permanent establishment under Indian law: Fixed Place PE, Agency PE, and Service PE.

How is permanent establishment calculated in India?

The place of management, though considered a PE, requires existence of an office or similar facility in order to constitute a PE and the management activities should be conducted through such fixed place. In other words, to constitute a PE, the existence of physical presence is must.

Can a company be a Permanent Establishment?

Recent tax reforms, in response to the rise in schemes eroding domestic taxable profit, has seen the definition of PE expanded and corporate structures re-categorised regardless of the entity status. Consequently, your enterprise may now fall under the definition of a Permanent Establishment.

Can an individual have a Permanent Establishment?

Since the place of business must be fixed, it also follows that a permanent establishment can be deemed to exist only if the place of business has a certain degree of permanency, i.e. if it is not of a purely temporary nature.

What is a PE declaration?

‘Permanent establishment’ is an important international tax concept, meaning a fixed place of business in another country or state, resulting in an income tax liability in that jurisdiction.

What is installation PE?

A Construction PE exists when the construction site or an installation project is carried out for a period more than the prescribed period under the respective Tax Treaty with that country.

Which is a permanent establishment ( PE ) in India?

The foreign enterprise would consider as a Permanent Establishment in India (as per Article 5 of Income Tax Treaty of India and foreign countries) if the foreign enterprise would have a fixed place of business in India or doing a business in India through: a place of management, branch, office, factory, workshop, warehouse etc. or

Which is the agency clause of permanent establishment in India?

The Indian subsidiary company can consider as a Permanent Establishment of foreign enterprise under agency clause of Article 5 (4) of the Income Tax Treaty between India and foreign country. The agency clause of Permanent Establishment is attracted if the agent appointed by the foreign enterprise in India is a dependent agent.

Which is the best definition of permanent establishment?

Permanent Establishment, refers to a fixed place of business or some other form of presence of the Non resident in the Source country, through which the business of the enterprise is wholly or partly carried on.

Can a foreign subsidiary consider permanent establishment in India?

However, in case the Indian subsidiary functioning as a dependent agent, the Indian Subsidiary can consider as Permanent Establishment of foreign enterprise into India.

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