International Taxation, Cross-Border Tax Planning &
Litigation Services – Ahmedabad & India

Key Services

• Advisory on India-centric international tax law and cross-border tax implications
• Tax optimisation strategies for Indian residents with global assets and NRIs with India-linked investments
• Interplay of Income Tax Act, DTAAs, and MLI provisions
• Tax litigation and representation before ITAT, High Courts, and Tax Authorities
• Transfer Pricing advisory
• Withholding tax planning, equalisation levy, GAAR compliance
• Applications before the Authority for Advance Rulings (AAR)
• Treaty interpretation, entitlement to treaty benefits, and PE risk mitigation
• Advance Pricing Agreements (APA) strategy and negotiations (legal positions; we coordinate with accounting firms for TP modelling)
• Mutual Agreement Procedure (MAP) assistance under applicable DTAAs
• Lower/nil withholding applications under Sections 195(2) and 197; TRC/FTC/Form-67 support for treaty relief
• POEM (Place of Effective Management) risk assessment for foreign entities with India-based management

Large numbers of Indian professionals and HNIs are relocating to the US/UK/EU, Canada, Australia, Germany and the Gulf. Migration alters tax incidence in India (Sections 4–9) and implicates FEMA/RBI rules on accounts, investments, and repatriation. We advise on:

• Residency and RNOR planning under Section 6; effect on global income taxation
• Continuing Indian filing obligations for non-residents (threshold-based) and PAN jurisdiction transfer to international taxation wings
• TDS on Indian-source income to non-residents (Section 195); applications under Sections 195(2)/197 for appropriate withholding
• Treaty relief and credit (TRC, Form-67, FTC) to prevent double taxation
• FEMA/RBI: conversion to NRO/NRE/FCNR accounts; repatriation (incl. USD 1m NRO route); sectoral restrictions for NRIs; immovable property rules (no purchase of agricultural land except via inheritance)
• Returning NRIs: transitional RNOR benefits; orderly re-entry of overseas assets/ESOP proceeds; FEMA permissions and reporting

• Private equity and cross-border M&A
• Startups and SaaS platforms with global user base
• Licensing of intellectual property and digital content
• Foreign subsidiaries and group service arrangements
• Overseas ESOPs and exit planning for Indian employees
• Royalty and FTS payments from Indian entities to foreign licensors
• E-commerce and digital platforms (cross-border service supply, SEP/FTS analysis)
• EPC/Infrastructure projects (offshore-onshore split; PE attribution)
• Pharma & life sciences (contract R&D, cost-sharing, royalties)
• Financial services/fintech (FEMA interface, TDS, cross-border payouts)

Our Approach to Tax Advisory and Planning

Our approach is principle-based, substance-driven, and structured around legal defensibility. We focus on:

• Understanding the business model to identify tax implications
• Anticipating risks and regulatory red flags across jurisdictions
• Ensuring compliance with GAAR, PPT, TP regulations, and anti-avoidance norms
• Collaborating with trusted accounting firms for documentation, functional analysis, and TP benchmarking when required

We are mindful of both tax efficiency and legal sustainability. For every structure we propose, we prepare a contemporaneous “defence pack” (facts, contracts, board materials, residency/substance evidence, GAAR/PPT analysis, TP rationale). This ensures positions are litigation-ready and audit-ready from day one.

Illustrative International Tax Planning Scenarios

1. Holding and Royalty Income Planning – India–Singapore

A group with business presence in India and Singapore may consider centralising its intellectual property (IP) ownership in Singapore, especially where development or exploitation occurs outside India. The Indian entity may license the IP and pay royalties to the Singapore-based owner, with the transaction structured in accordance with the India–Singapore DTAA.

If conditions of the treaty are met (including beneficial ownership and substance), royalty payments from India may be subject to a withholding tax of 10%, instead of the 20%+ rate under Indian domestic law.

By applying the India–Singapore DTAA (which caps royalty withholding tax at 10%), and ensuring arm’s length pricing, the group may:

• • Minimise Indian withholding tax on royalties (compared to 20% under domestic law)
  • Avoid PE exposure by ensuring no control or decision-making from Singapore
  • Achieve overall group-level tax efficiency by leveraging Singapore’s lower corporate tax rate on IP income (17% headline, often reduced via incentives)

2. Investment in Unlisted Indian Company via Treaty Jurisdiction

A foreign investor considering an investment in an unlisted Indian company may explore interposing a holding entity in a favourable treaty jurisdiction (such as Singapore or the Netherlands), subject to satisfaction of beneficial ownership and PPT/LOB conditions.

Under Indian domestic law (Section 9(1)(i), Explanation 5 & 6), capital gains from sale of foreign shares deriving value from Indian assets may be taxable in India (indirect transfer). However, under the India–Singapore or India–Netherlands DTAAs, capital gains on sale of foreign shares may be taxable only in the country of residence of the seller, provided LOB tests are met.

In such cases, the investor can:

• • Avoid Indian capital gains tax (which could be 10–20% under domestic law)
  • Ensure certainty of outcome, especially where IPO or exit is contemplated
  • Align the holding structure with regulatory and commercial considerations

This distinction between domestic indirect transfer rules and treaty override has been upheld in judicial pronouncements provided the entity has sufficient commercial substance.

3. ESOP/RSU Exit Planning and Tax Residency Management

An Indian resident holding employee stock options or Restricted Stock Units (RSUs) in a foreign parent company may face a significant tax burden upon vesting or sale. In such cases, two tools may help manage exposure:

• • Staggered repatriation: Instead of bringing in the full sale proceeds in one year, amounts may be repatriated in tranches across multiple financial years. This may allow better utilisation of slab rates, reduce surcharge impact (especially for income > ₹2 crore), and align with foreign tax credit timing.
  • Tax residency planning: If the individual expects to relocate outside India (or return from abroad mid-year), carefully managing physical presence can help qualify as Non-Resident or Resident but Not Ordinarily Resident (RNOR) under Section 6. In such cases, foreign income may not be taxable in India, depending on timing and structure.

This approach can translate into:

• • Lower marginal tax rates
  • Reduced effective surcharge
  • Strategic use of tax treaties and residency rules

A foreign consulting or technology company engaging Indian clients may evaluate whether its activities trigger a Permanent Establishment (PE) under the India–US or India–UK DTAA. If services are rendered entirely from abroad with no dependent agent or fixed place in India, business profits may not be taxable in India under the treaty.

However, if the engagement involves prolonged on-site presence or use of personnel, some treaties trigger service PE after a specified threshold (e.g., 90 days in 12 months). Where the payment qualifies as Fee for Technical Services (FTS), treaty provisions may apply a concessional rate (often 10–15%) in contrast to 20% under domestic law.

Through appropriate contractual structuring and factual planning, the group may:

• • Avoid creation of a service PE
  • Optimise TDS obligations under Section 195
  • Improve compliance certainty and lower tax leakage on Indian-source income

5. APA/MAP for Transfer Pricing Controversies

5. APA/MAP for Transfer Pricing Controversies
A technology services group facing recurring TP adjustments on captive services opted for a unilateral APA to lock in margins prospectively, while pursuing MAP for rollback years. The legal strategy will focus on characterisation, value drivers, and functional analysis, with benchmarking and documentation coordinated through partner accounting firms.
Outcomes may include: (i) certainty of margins, (ii) rollback dispute closure, and (iii) reduced litigation bandwidth.

6. POEM Risk for Overseas Holding Company

A non-resident holding company with India-based promoters risked being treated as resident in India due to effective management occurring from India. Decision-making (board control, veto rights, meeting locations, documentary trail) could be ring-faced to support non-resident status and avoid global income taxation in India.

Key levers here could be: board calendars, delegated authorities, travel patterns, and governance evidence.

7. RNOR Window for Migrating Founders

A founder relocating abroad sought to defer Indian taxation on certain foreign-source income during transition. By carefully managing presence days and qualifying as Resident but Not Ordinarily Resident (RNOR), the client was able to shield specified foreign income in India for the RNOR period. We aligned timing of vesting/sale and repatriation to optimise overall tax outcome.
To read more about possible scenarios and solutions, you are advised to go to https://rdlawchambers.com/law-guide-and-articles/

Compliance with GAAR and Principal Purpose Test (PPT)

1. Holding and Royalty Income Planning – India–Singapore

All the above examples are grounded in transactions or structures that—when properly implemented—would typically be supported by genuine commercial substance, economic rationale, and documentation aligning with global tax principles.

India’s adoption of the OECD MLI alters several treaty articles (PPT, tie-breaker rules, anti-fragmentation, commissionaire arrangements). We map pre- and post-MLI outcomes for relevant treaties and ensure structures meet the updated anti-abuse thresholds without compromising commercial objectives.
To mitigate risk under India’s General Anti-Avoidance Rules (GAAR) and the Principal Purpose Test (PPT) under applicable DTAAs:

• • The structures should not be designed solely for obtaining tax benefits
  •  Interposed entities must demonstrate real economic activity (board control, local infrastructure, investment function)
  • Where tax treaty relief is claimed, tests of beneficial ownership, residency, and substance-over-form must be met
  •  Planning involving residency status should rely on legal tests under Section 6, not artificial steps

When these elements are demonstrable, treaty benefits are typically defensible.

Our reviews prioritise (i) business purpose evidence, (ii) beneficial ownership and control, (iii) substance in the interposed jurisdiction (people/functions/assets), and (iv) contemporaneous documentation. Where a position is borderline, we advise alternatives that maintain commercial viability while lowering anti-avoidance risk.

Frequently Asked Questions (FAQs)

To know more about our services, you are requested to visit https://rdlawchambers.com/our-services/.
R & D LAW CHAMBERS
604 Entice, Bopal Road, Ambli, Ahmedabad, Gujarat 380058
Phone: +91-9898550411

*This page is intended solely for informational purposes. It does not constitute legal advice. Readers should seek formal professional guidance for specific matters from appropriate source.