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Immigration and Tax – the Interplay and principles to consider

Lead Speaker – Amarpal Chadha

Panelists - Sruthi Ananthachari, Stephen Rao & Hemamalini Venkatraman

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Topic of Discussion

Impact of Visa on tax

Tax Documentation for Immigration purposes

Importance of being compliant to Immigration laws

Importance of being compliant to tax laws

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Impact of Visa on tax

Which is the appropriate Visa – Business or Employment Visa?

Thin line of difference between Business and Employment Visa

Instances of non-compliance in terms of the activity undertaken by individuals.

For example, the India rules for Employment and Business Visa are as follows:

Employment Visa Business VisaIssued only to highly skilled/qualified professional

Issued for visits for setting up business

Not granted for jobs where qualified Indians are available/routine clerical jobs

For purchase/sell commercial products/meetings/discussions/attending board meetings

Salary should be in excess of USD 25,000 p.a Not granted for full time employment, money lending business, etc

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Impact of Visa on tax – Continued..

Key tax Implicatio

ns

Individual Tax

Corporate Tax

Social Security

PE Exposure

Service tax on cross

charge

Acceptance by

authorities of tax

concepts

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Tax Documentation for Immigration Proper coordination with the tax and Immigration team for tax documentation

No clear guidelines on documentation and the type of documents varies from location to location

Immigration related information available for tax authorities (For example: Passport number to be provided in the India Tax return forms)

Illustrative list of Tax related information to be submitted with the Immigration authorities in India(Documentation varies region wise)

PAN Card/Acknowledgement for PAN Application for FRRO registration Copies of tax returns, declaration of taxes paid for current year and copies of challans for

Visa extension Proof of PF contribution to be provided to FRRO – if salary is increased for Visa extension Salary confirmation (Annual Certificate and Monthly Certificate) for FRRO registration

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Importance of being compliant to Immigration laws

Non compliance of Immigration rules will have strict consequences for both employer and employee

The authorities can exercise their general powers as follows:

Impose monetary penalty on employer/employee Deport the employee Blacklist the employer

Penalties and Prosecution proceedings could be initiated for non-compliance

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Importance of being compliant to tax laws Non compliance of tax laws will attract penal and prosecution proceedings

Some of the Non-compliances under the Indian tax laws:Non Compliances ConsequencesNon Compliance under the India Income tax ActConcealment of income/Furnishing of wrong information

100 % of tax sought to be evaded and could levy upto maximum of 300 % of tax

Non Compliance under the Black Money ActConcealment of overseas income/asset 3 times the amount of taxFailure to furnish ROI within specified time or Failure to furnish information/inaccurate information in ROI

INR 10 Lakhs

The Black Money law also imposes prosecution proceedings for certain offences with willful attempt to evade tax

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