SOURCING ARMS OF NRIs NOT TO PAY TAX

In a landmark decision, the Bangalore Tribunal has ruled that the income arising from non-resident Indians’ (NRIs’) sourcing operations through liaison offices in India is not taxable. The liaison offices have of late come under the scanner of the revenue department. The tax authorities are of the view that sourcing goods from India through agents is a revenue generating activity and so income from it should be taxed. The ruling is a breather for NRIs buying goods through agents in India for
exports. The ruling is also important as it sets a principle that the purchase activity is not taxable in India, irrespective of whether the goods are purchased by the principal or the agent.