Jan 14, 2023
Need clarity in non-residents’ tax under SEP norms: Experts
The scope for taxing income of non-residents doing business in India was widened with effect from April 1, 2021. A ‘significant economic presence’ (SEP) of a non-resident constitutes a ‘business connection’ in India and income related to such activities is taxable in India. Tax experts are hoping for raising of the Rs 2-crore threshold in the forthcoming Budget and clarity on various issues.
An SEP exists if the non-resident carries out ‘any’ transactions in relation to goods, services or properties with any Indian resident if the aggregate payment for such transactions exceeds Rs 2 crore in a year. An SEP is also created if the non-resident ‘undertakes or is engaged in systematic or continuous soliciting of business activities’ with at least 3 lakh users.