International taxation, Taxability of non-resident individual with active business in India
If an individual who was a resident of India for 5 years and running a proprietorship business in India becomes a non-resident, the taxability of their business income in India will depend on the source of the income and the residential status of the individual.
Under the Indian Income Tax Act, the tax liability of a non-resident individual in India is determine by the source of their income. If the income is source in India, it will be taxable in India, even if the individual is a non-resident.
In case of a proprietorship business, the profits earned from the business are consider as the income of the proprietor, and the tax liability will depend on the residential status of the proprietor. If the proprietor is a non-resident, the business income sourced in India will be taxable in India as per the provisions of the Income Tax Act .
The taxability of the business income will also depend on whether India has entered into a Double Taxation Avoidance Agreement (DTAA) with the country of the non-resident’s residence. The DTAA may provide relief from double taxation of the same income in both India and the country of the non-resident’s residence.
It is advisable for the individual to consult a tax professional or an accountant to determine the taxability of their business income in India and the tax liabilities they may have as a non-resident International taxation.
To Visit https://www.incometax.gov.in/
