Chapter IX Charge Of Branch Profits Tax

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The Tax PublishersSection C PART D BRANCH PROFITS TAX CHAPTER IX CHARGE OF BRANCH PROFITS TAX 111. Tax on branch profits (1) Subject to the provisions of this Code, every foreign company shall, in addition to income-tax payable, be liable to branch profits tax in respect of branch profits of a financial year. (2) The branch profits tax shall be charged in respect of the branch profits of a financial year of every foreign company at the rate specified in Paragraph D of the Second Schedule. (3) The branch profits referred to in sub-section (1) shall be the income attributable, directly or indirectly, to the permanent establishment or an immovable property situated in India, included in the total income of the foreign company for the financial year, as reduced by the amount of income-tax payable on such attributable income. (4) The liability to branch profits tax shall be discharged by payment of pre-paid taxes in accordance with the provisions of this Code as if the branch profits tax was income-tax. (5) The branch profits tax charged under this section shall be collected after allowing credit for pre-paid taxes, if any, in accordance with the provisions of this Code. FROM NOTES ON CLAUSES Clause 111 is the only clause of Part D and Chapter IX of the Bill and deals with tax on branch profits of a foreign company. The said clause provides that every foreign company shall be liable to branch profits tax in respect of branch profits of a financial year and such tax shall be charged at the rate specified in Paragraph IV of the Second Schedule. This tax shall be in addition to any income-tax payable by the said foreign company. The clause further provides that the branch profits shall be the income attributable, directly or indirectly, to the permanent establishment or to an immovable property situated in India and included in the total income of the foreign company for the financial year, as reduced by the amount of income-tax payable on such attributable income. The said clause also provides that the liability to branch profits tax shall be discharged by payment of pre-paid taxes and the tax charged under this clause shall be collected after allowing credit for such pre-paid taxes, if any, in accordance with the provisions of the Code. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersSection C
PART D
BRANCH PROFITS TAX
CHAPTER IX
CHARGE OF BRANCH PROFITS TAX

111. Tax on branch profits

(1) Subject to the provisions of this Code, every foreign company shall, in addition to income-tax payable, be liable to branch profits tax in respect of branch profits of a financial year.

(2) The branch profits tax shall be charged in respect of the branch profits of a financial year of every foreign company at the rate specified in Paragraph D of the Second Schedule.

(3) The branch profits referred to in sub-section (1) shall be the income attributable, directly or indirectly, to the permanent establishment or an immovable property situated in India, included in the total income of the foreign company for the financial year, as reduced by the amount of income-tax payable on such attributable income.

(4) The liability to branch profits tax shall be discharged by payment of pre-paid taxes in accordance with the provisions of this Code as if the branch profits tax was income-tax.

(5) The branch profits tax charged under this section shall be collected after allowing credit for pre-paid taxes, if any, in accordance with the provisions of this Code.

FROM NOTES ON CLAUSES

Clause 111 is the only clause of Part D and Chapter IX of the Bill and deals with tax on branch profits of a foreign company. The said clause provides that every foreign company shall be liable to branch profits tax in respect of branch profits of a financial year and such tax shall be charged at the rate specified in Paragraph IV of the Second Schedule. This tax shall be in addition to any income-tax payable by the said foreign company.

The clause further provides that the branch profits shall be the income attributable, directly or indirectly, to the permanent establishment or to an immovable property situated in India and included in the total income of the foreign company for the financial year, as reduced by the amount of income-tax payable on such attributable income.

The said clause also provides that the liability to branch profits tax shall be discharged by payment of pre-paid taxes and the tax charged under this clause shall be collected after allowing credit for such pre-paid taxes, if any, in accordance with the provisions of the Code.