NRIs engaged in exports from India cannot turn their back on their tax liability from the income earned from exported goods with a tax authority clarifying that such income is taxable.
In a case related to a Singapore-based NRI Mustaq Ahmed, the Authority for Advance Ruling said the income earned by him was taxable in India as the income has been received in New Delhi.
"The income derived by the applicant out of the purchase and export activities undertaken by him attracts charge to tax", the AAR said replying to the questions asked by the NRI on the taxability of his income.
The NRI, Mustafa deals in manufacture and sale of gold jewellery through 'Mustafa Gold Mart' in Chennai. Besides, he is engaged in the business of export of gold jewellery mainly to Singapore.
The AAR while answering the questions said, "there is no doubt and it is not in dispute that the income arising from the sale proceeds of exported goods has actually been received in India".
Quashing the argument of Mustaq that the income could not be said to arise in India, the AAR said that his banks at Chennai have been crediting the amounts received from the importer or buyer to the account of the applicant and could be taken as a good evidence that the income arose in India.
{{/usCountry}}Quashing the argument of Mustaq that the income could not be said to arise in India, the AAR said that his banks at Chennai have been crediting the amounts received from the importer or buyer to the account of the applicant and could be taken as a good evidence that the income arose in India.
{{/usCountry}}Mustaq in his submissions had said that the income could not be said to have accrued or arisen in India and also maintained that he had separate accounts for his proprietory business in Chennai and for the purchases meant for exports.
The AAR ruling is binding not only to the parties which have sought its order but also sets a pursuasive precedence for other entities engaged in such businesses.