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Business Standard
13-06-2025
- Business
- Business Standard
Wrong visa, full tax: Indian entrepreneurs abroad risk losing NRI status
Choosing the wrong visa type for your international travels could not only lead to problems with immigration authorities abroad, but also spark scrutiny from India's income tax department. Indian entrepreneurs who spend long periods overseas managing businesses often believe they qualify as Non-Resident Indians (NRIs) and are therefore exempt from paying tax on their global income. But tax authorities can take a different view — especially if the visas used suggest otherwise. 'The tax residency has a major role to play in Indian taxation as it goes to define the scope of total income which would be taxable in India. For an Indian tax resident, their global incomes would be exigible to Indian taxation. However, for non-residents, the scope is curtailed and restricted to incomes with an Indian nexus,' said Amit Gupta, partner at Saraf and Partners. One such example is that of M Mahadevan, founder of the Hot Breads bakery chain. The income tax department decided to tax his global income, arguing he was a resident of India during specific years and not an NRI, as he claimed. A tribunal later upheld the department's decision. Tourist visas didn't help Mahadevan's case The key issue was the kind of visa Mahadevan used. Although he claimed to be conducting business abroad, the tribunal noted that he travelled on tourist visas to countries like Malaysia and Singapore. 'Mahadevan had multiple-entry visas and travelled many times a year from India and also from other countries like the UAE. He claimed to have stayed outside India for 182 days or less in each of the three years and that his travel was purely for business,' said CA and advocate Kinjal Bhuta, secretary, Bombay Chartered Accountants' Society. 'But the tribunal rejected this, based on FRRO data and passport stamps which showed longer stays in India. His visas were for social or tourist purposes, not for employment or business. The tribunal said holding business interests abroad doesn't automatically make overseas visits business-related — especially when the visa itself says 'social visit',' Bhuta added. What the tribunal said about NRI status • Mahadevan travelled frequently, but on tourist visas • He claimed to be overseas for business, but had no employment visa • Immigration records showed he stayed in India longer than permitted under NRI rules • The tribunal accepted FRRO data over Mahadevan's own claims • Global income was therefore considered taxable in India 'The tribunal rejected Mahadevan's NRI claim because he used tourist visas for foreign travel, which don't permit employment or business abroad. This indicated he wasn't genuinely working or residing overseas,' said Sudhir Kaushik, founder and CEO, 'If he had used business or employment visas, it could have potentially supported his claim. But even then, the tribunal focuses on the substance of the stay, not just the visa label,' added Aditya Bhattacharya, partner at King Stubb & Kasiva, Advocates and Attorneys. What could Mahadevan have done differently? Using the right visa matters, but it's not the only thing tax authorities check. 'In this case, a business or work visa would have strengthened his claim that he was abroad for business reasons,' said Gupta. 'But merely having overseas interests isn't enough — the assessee must prove that the visits were indeed for employment purposes and meet the threshold under Section 6 of the Income Tax Act.' Dasgupta explained, 'The tribunal has relied on the kind of visa approvals to assess Mahadevan's true intent. It's possible that a higher court may look at the broader facts, but this ruling puts the burden of documentation squarely on the taxpayer.' What documents do tax authorities check? According to experts, here's what Indian tax officials usually examine to verify a person's NRI status: • Tax residency certificate (TRC) from a foreign country • Form 10F with PAN, nationality, address, and tax ID • Employment contract or appointment letter with dates and overseas location • Salary slips and foreign bank statements • Valid business or work visa or residence permit • Proof of overseas business activity and control • Travel records and passport stamps • Utility bills, lease agreements, or any proof of overseas residence • Local tax filings in the foreign country • Emails and internal records showing control and business decisions Advice for Indian entrepreneurs abroad To avoid similar outcomes, Bhut suggested the following: • Always travel with a valid business or employment visa if the trip is work-related • Maintain strong documentation around employment, income, and location • Avoid prolonged or frequent stays in India that can trigger residency under Section 6 • File local tax returns and obtain a TRC in the host country • Keep detailed records of meetings, decision-making, and control if you run a business from abroad • Ensure global income disclosures are consistent across jurisdictions 'Using appropriate visas can prevent the kind of problems faced in this case,' said Bhuta. 'Often, tourist visas are chosen for convenience. But if the visit is for business, it is best to go through the proper route and maintain consistent records. Substance over form is what matters — you must be able to prove that you were genuinely abroad for work, not just structured that way on paper.'
Time of India
11-06-2025
- Business
- Time of India
'Just managing': US tariffs leave Indian shrimp farmers struggling
NEW DELHI: R. Mahadevan, a shrimp farmer in southern India, is considering something no farmer wants to say out loud: stopping production. Having already seen his monthly income shrink in recent years due to rising costs and stagnant demand, he said U.S. President Donald Trump 's planned tariffs on Indian exports may push him to the brink. "Already I am struggling, just somehow managing," said 48-year-old Mahadevan, adding that his income had fallen to below $200 a month from about $350 in 2018. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Elegant New Scooters For Seniors In 2024: The Prices May Surprise You Mobility Scooter | Search Ads Learn More Undo Trump said in early April his government would impose a 26% tariff on all Indian exports, including the thousands of tonnes of shrimp Indian exporters ship to American customers each year. Mahadevan is among the hundreds of thousands of Indian shrimp farmers bracing for the impact of Trump's trade wars and is worried the 26% tariff could make his product too expensive in the U.S. market, the top destination for Indian shrimp. Live Events "If I shut down my farm, the idle ponds and machinery will be ruined, and restarting will become more difficult," said Mahadevan in the town of Karhiripulum in Tamil Nadu state. "But (I have) no other option, I cannot afford to sell my shrimp any cheaper." Indian negotiators won a 90-day pause in the tariff increase, keeping the tariff on exports at 10% until July, while pushing for a broader trade deal with the United States by the end of the year. But for the hundreds of thousands of farmers raising vannamei shrimp - a fast-growing species farmed in small saline ponds along the country's coastal districts - any increase in the cost of sending their product to the United States could put them out of business. There were 120,000 vannamei shrimp farmers in 2021, according to the latest industry estimates. Shrimp accounts for 66% of India's seafood exports and are worth billions of dollars, according to the Ministry of Commerce and Industry. But the people cultivating them tend to be impoverished and rely on loans to set up their small businesses, making them particularly vulnerable to falling prices and global shocks, said the Prawn Farmers Federation of India. While an exporting boom buoyed the shrimp industry at large in 2021, farmers said they did not benefit from the government subsidies made available to the large exporters they buy feed from and sell their shrimps to. Troubled sector India is the world's largest exporter of frozen shrimp, shipping more than 716,000 metric tonnes in the financial year ending in 2024, according to government data. Nearly 60% of India's shrimp exports - $2.9 billion worth - went to the United States in 2024, the data showed. But the industry has been struggling. After peaking in 2021, shrimp exports have declined amid a glut in the world's supply, falling prices and repeated disease outbreaks, according to a report from the Global Shrimp Forum. Indian shrimp farmers have also been grappling with the 7% duty the United States imposed on the sector in 2024 for countervailing and anti-dumping purposes, according to Siddharth Chakravarty, an expert on the fishing sector. With the 7% anti-dumping and countervailing duty, as well as the 10% tariff, India's shrimp exports to the United States already face a 17% duty that could climb as high as 37% if Trump goes ahead with the higher tariff, said a trade analyst who asked not to be named. "(India's shrimp) sector is already reeling from a global oversupply of shrimp, on one hand, and demand stagnation on the other," said Chakravarty. "Now, a higher tariff could push it over the edge." Mahadevan said he earns about a fifth less on a kilo of shrimp than he did three years ago, "whereas all costs - feed, labour, electricity, diesel - have increased too much." "If shrimp prices go down further, my family will suffer surely," said Mahadevan, who has already had to delay his daughter's wedding and a house renovation. The concern is that a steep U.S. tariff could wipe out profits entirely in a fragile industry, said Chakravarty. Shrimp farmers heavily rely on loans to cover their input costs - such as feed, electricity, diesel and land leasing - while output is sensitive to weather, seed quality and disease outbreaks. "With margins near zero, even small changes can be catastrophic. Even a 1% additional tariff is salt in the already raw wound," said V. Balasubramaniam, general secretary of the Prawn Farmers Federation of India. Farmers are now calling on the government for help, demanding interventions to reduce input costs and access to better markets and prices for their shrimps. There appears to be some relief on the way. The administration in Andhra Pradesh, India's top shrimp-producing state, has been subsidising power to shrimp farms since April and is urging the national government to sign a trade pact with the European Union to reduce the sector's reliance on the U.S. market, according to local media. Balasubramaniam said feed manufacturers started offering small discounts to farmers in April after meeting with local officials in Andhra Pradesh but that these were merely "symbolic" given the discounts were much smaller than the fall in shrimp prices. Meanwhile, exporters are rushing to sell about 40,000 tonnes of shrimp from last year's harvest that are in cold storage before the new tariff takes effect, according to a separate local media report. Looking for new markets Chakravarty said the over-dependence on the United States has helped create the crisis shrimp farmers now face. "One market for one product yielded benefits for India's shrimp sector in the beginning. But that boom has ended," he said. Expanding sales of shrimp at home would also help, said Balasubramaniam. That would require the government to invest in a national distribution network, including cold-chain logistics such as refrigerated transportation, he said. "We have been reaching out to the national government to establish a strong domestic market, but so far it has been a piecemeal approach," Balasubramaniam said. India's commerce ministry did not immediately respond to the Thomson Reuters Foundation's request for a comment.
Economic Times
10-06-2025
- Business
- Economic Times
Don't mix business with tourist visas, affirms tax tribunal ruling
Mumbai: The perils of travelling on a tourist visa for business purposes may not be confined to run-ins with foreign authorities. Sometimes it could even spell trouble with the local taxman. Indian businessmen who spend months abroad to look after overseas interests and carefully preserve their NRI status, may even find themselves in a spot if the tax authorities question their 'residency' status due to the type of visas approved by countries they travelled to. Recently, a tribunal has upheld the Income Tax (I-T) department's decision to tax the 'global income' of the bakery chain Hot Breads founder who, according to the tax office was a 'resident' for certain years, and not an NRI as claimed by the Chennai-based relaxation on the period of stay given to someone who was abroad for employment or business was denied to Mahadevan as he had travelled on tourist visas. His argument that the visits were purely in connection with his businesses in multiple countries was rejected by the Chennai bench of the I-T Appellate Authority, a quasi-judicial authority. (Join our ETNRI WhatsApp channel for all the latest updates) Mahadevan to Move Court When contacted, a family member speaking on behalf of Mahadevan, said, "We are currently reviewing the order of the Hon'ble ITAT in detail. While we are disappointed with the outcome, we believe we have a strong case on merits and are considering all available legal options. We remain committed to full compliance with all applicable laws and regulations and will continue to cooperate with the authorities as required."The residency status of an individual is determined by the rules on the number of days spent. If someone stays for 182 days or more in India, he is considered as a resident whose global income (along with local earnings) for that year may be taxed in India. Alternatively, if a person spends at least 60 days in a year and a total of 365 days in the previous four years, he too is treated as a tax the second rule extends a partial exemption to those travelling overseas for jobs or self-employment. For them, the minimum period of stay is 182 days instead of 60. This relief was not given to number of days are typically counted on the basis of the timing-stamp on passports. The tax office, however, obtained the information from the Foreigners Regional Registration Office (FRRO)-a practice that was upheld by the Tribunal. Based on the FRRO data, the I-T department claimed that Mahadevan had spent 182 days or more in the assessment years 2013-14, 2014-15, and if the duration of stay were less than 182 days, Mahadevan's overseas travels would not have been considered to treat him as a resident-thanks to his tourist visas and despite his argument that a person would not travel a country frequently for tourism. The tribunal held that every country restricts visas for specific purposes."The decision underscores the importance of holding the correct visa category, as an inappropriate visa can jeopardize an individual's residential status and complicate the taxation of the global income in India. Nevertheless, if it can be factually established that the individual left India for the purpose of conducting business and genuine business activities were indeed undertaken abroad (though under an inappropriate visa), then the benefit of extending the 60-day period to 182 days under Explanation 1(a) to Section 6(1) of the I-T Act should be granted. However, it is important to note that such a benefit is available only when the individual 'leaves' India for the purpose of employment or business and not 'visiting' abroad in connection with business," said Ashish Karundia, founder of the CA firm Ashish to Rajesh Shah, partner of Jayantilal Thakkar & Co, "A resident Indian becomes non-resident only if they go abroad for employment, including self-employment. Simply staying outside India for 182 days does not make anyone a non-resident. The type of visa is equally important. But this is ignored-either due to ignorance or for convenience." The ruing implied that an assessee cannot avoid tax on global earnings merely because he runs businesses abroad. Countering ITAT's decision to disregard the tax residency certificate issued by the UAE to Mahadevan, Harshal Bhuta, partner at the CA firm PR Bhuta & Co, said "An individual staying in the UAE for over 183 days in a calendar year qualifies as a resident of UAE under the India-UAE DTAA (tax treaty), irrespective of the purpose of stay. In cases of dual residency, the treaty's tie-breaker rules must apply and the treaty-based residency cannot be summarily disregarded."
Time of India
10-06-2025
- Business
- Time of India
Don't mix business with tourist visas, affirms tax tribunal ruling
Live Events Mumbai: The perils of travelling on a tourist visa for business purposes may not be confined to run-ins with foreign authorities. Sometimes it could even spell trouble with the local businessmen who spend months abroad to look after overseas interests and carefully preserve their NRI status , may even find themselves in a spot if the tax authorities question their 'residency' status due to the type of visas approved by countries they travelled a tribunal has upheld the Income Tax (I-T) department's decision to tax the 'global income' of the bakery chain Hot Breads founder who, according to the tax office was a 'resident' for certain years, and not an NRI as claimed by the Chennai-based relaxation on the period of stay given to someone who was abroad for employment or business was denied to Mahadevan as he had travelled on tourist visas. His argument that the visits were purely in connection with his businesses in multiple countries was rejected by the Chennai bench of the I-T Appellate Authority, a quasi-judicial authority.(Join our ETNRI WhatsApp channel for all the latest updates)When contacted, a family member speaking on behalf of Mahadevan, said, "We are currently reviewing the order of the Hon'ble ITAT in detail. While we are disappointed with the outcome, we believe we have a strong case on merits and are considering all available legal options. We remain committed to full compliance with all applicable laws and regulations and will continue to cooperate with the authorities as required."The residency status of an individual is determined by the rules on the number of days spent. If someone stays for 182 days or more in India, he is considered as a resident whose global income (along with local earnings) for that year may be taxed in India. Alternatively, if a person spends at least 60 days in a year and a total of 365 days in the previous four years, he too is treated as a tax the second rule extends a partial exemption to those travelling overseas for jobs or self-employment. For them, the minimum period of stay is 182 days instead of 60. This relief was not given to number of days are typically counted on the basis of the timing-stamp on passports. The tax office, however, obtained the information from the Foreigners Regional Registration Office (FRRO)-a practice that was upheld by the Tribunal. Based on the FRRO data, the I-T department claimed that Mahadevan had spent 182 days or more in the assessment years 2013-14, 2014-15, and if the duration of stay were less than 182 days, Mahadevan's overseas travels would not have been considered to treat him as a resident-thanks to his tourist visas and despite his argument that a person would not travel a country frequently for tourism. The tribunal held that every country restricts visas for specific purposes."The decision underscores the importance of holding the correct visa category, as an inappropriate visa can jeopardize an individual's residential status and complicate the taxation of the global income in India. Nevertheless, if it can be factually established that the individual left India for the purpose of conducting business and genuine business activities were indeed undertaken abroad (though under an inappropriate visa), then the benefit of extending the 60-day period to 182 days under Explanation 1(a) to Section 6(1) of the I-T Act should be granted. However, it is important to note that such a benefit is available only when the individual 'leaves' India for the purpose of employment or business and not 'visiting' abroad in connection with business," said Ashish Karundia, founder of the CA firm Ashish to Rajesh Shah, partner of Jayantilal Thakkar & Co, "A resident Indian becomes non-resident only if they go abroad for employment, including self-employment. Simply staying outside India for 182 days does not make anyone a non-resident. The type of visa is equally important. But this is ignored-either due to ignorance or for convenience." The ruing implied that an assessee cannot avoid tax on global earnings merely because he runs businesses ITAT's decision to disregard the tax residency certificate issued by the UAE to Mahadevan, Harshal Bhuta, partner at the CA firm PR Bhuta & Co, said "An individual staying in the UAE for over 183 days in a calendar year qualifies as a resident of UAE under the India-UAE DTAA (tax treaty), irrespective of the purpose of stay. In cases of dual residency, the treaty's tie-breaker rules must apply and the treaty-based residency cannot be summarily disregarded."
India Today
03-06-2025
- Entertainment
- India Today
Shankar Mahadevan rocks musical tribute to armed forces ahead of IPL 2025 final
Shankar Mahadevan delivered a special musical performance to pay tribute to the Indian armed forces ahead of the IPL 2025 final between RCB and PBKS at the Narendra Modi stadium in Ahmedabad on Tuesday, June 3. The performance was done to honour the armed forces for their incredible work during Operation Sindhoor was a decisive military operation executed by the Indian army in retaliation for the Pahalgam terror attack. Salute to the Indian armed forces. A special dance performance was done for the Indian armed up the #Final with an enthusiastic Tribute Ceremony #TATAIPL | #RCBvPBKS | #Final | #TheLastMile IndianPremierLeague (@IPL) June 3, 2025advertisementShankar Mahadevan presented a medley of songs that celebrated the spirit of India. The musical legend was supported by his sons, Siddharth and Shivam Mahadevan. Ahead of the musical performance, a beautiful video package was played, honouring the armed forces. Mahadevan started with the song 'Bharat' from Manikarnika. The next was the Lakshya title song, that got the crowd on their feet as Indian flags were waved by the fans up was the Ae Watan song from Raazi. Another song from the movie Lakshya was played the next and it was Kandon Se Milte Hain Kandhe. Next up was the ever iconic 'Vande Mataram' sung by Mahadevan and his sons, followed by Yeh Desh Hai Veer Jawanon Ka, an iconic song from Naya Daur.A patriotic tribute ceremony for the Indian Armed Forces Shankar Mahadevan with a performance worthy of the occasion #TATAIPL | #RCBvPBKS | #Final | #TheLastMile | @Shankar_Live IndianPremierLeague (@IPL) June 3, 2025advertisementThe famous song 'Lehra Do' from the movie 83 was next and followed by the 'Hindustani' track from the movie Dus as the atmosphere inside the stadium was Shankar Mahadevan said about the performanceShankar Mahadevan talked about performing in the IPL final to Hindustan Times and said he was humbled by the opportunity to perform for the armed forces."Of course, cricket is such a big sport here, and to be chosen to perform at the closing ceremony is really gratifying. I am humbled at this opportunity, and since I will be performing with both my sons, it makes it even more special," said updated on IPL 2025 with India Today! Get match schedules, team squads, live score, and the latest IPL points table for CSK, MI, RCB, KKR, SRH, LSG, DC, GT, PBKS, and RR. Plus, keep track of the top contenders for the IPL Orange Cap and Purple Cap. Don't miss a moment!Tune InTrending Reel IN THIS STORY#IPL 2025
