Can my foreign company be taxed in India because I live here?
It can. A company incorporated outside India can be treated as an Indian tax resident if its key management and commercial decisions are in substance made in India, and a sole founder who has relocated is a common instance. The consequence is not marginal. Indian residence would bring the company's worldwide income into the Indian base rather than only its Indian-source income. So the question is worth answering deliberately rather than assuming that a foreign incorporation and a foreign registered office settle it. What settles it is where the substantive decisions are actually taken.
We hold all our board meetings outside India, is that enough?
Not on its own. The test looks at where substantive decisions are actually taken, not where meetings are formally convened. A board that travels to another country to ratify decisions already made in India has documented the venue, not the decision-making. Ask a harder question of your own records. Who proposed each significant matter, who shaped it, and where were they when the real choice was made? If the honest answer is India, moving the meeting does not change the analysis. Either the decision-making moves, or the position is what it is.
What records show where a company's decisions are really made?
The evidence is the governance record taken as a whole: board papers and who prepared them, agendas and who set them, the correspondence in which options were developed, delegated authorities and what they actually cover, and minutes that record the discussion rather than only the resolution. Thin minutes that state a venue and an outcome prove very little, and they are what most companies have. Build the record as decisions are made. This is one of the few tax questions where the contemporaneous file genuinely decides the answer, because the answer is a description of behaviour.
What happens if India treats our overseas company as resident?
Its worldwide income comes into the Indian base, not merely the part connected with India. That is a different order of consequence from an argument about a slice of profit, and it can arrive long after the behaviour that caused it, with the company having filed nothing in India for those years. The exposure is therefore cumulative. This is why the risk is managed through governance records prepared at the time rather than through an argument assembled afterwards from whatever correspondence happens to have survived.
Does having one Indian resident director create a problem?
One director's location is a fact in the analysis, not a rule that decides it. What matters is whether the key management and commercial decisions are in substance being taken in India. A board where the Indian-resident member proposes, shapes and effectively determines the significant matters looks quite different from one where that member is a voice among several whose decisions are genuinely collective and taken elsewhere. Look at how decisions actually get made across a year of real business, and record it, rather than counting where the directors live.
Is signing resolutions abroad enough to keep a company non-resident?
No. Signing is the last step of a decision, and the test is concerned with where the decision was made rather than where it was recorded. A circulating resolution signed in another country after the matter was settled in India adds a signature to the file and nothing to the analysis. If the objective is a defensible non-resident position, the substantive work, meaning the options, the deliberation and the choice, has to sit with people outside India, and the record has to show that it did.
What is RNOR status?
Resident but not ordinarily resident — a transitional category in India between non-residence and full residence, reached on the day counts after returning from a period abroad. While it lasts, certain foreign income stays outside the Indian tax base, which makes the timing of a return to India worth planning rather than leaving to chance. It is temporary, and the window is set by the day-count rules. See RNOR status.
What is the Liberalised Remittance Scheme?
The Reserve Bank of India framework under which a resident individual may remit up to an annual ceiling for permitted purposes — education, medical treatment, travel, maintenance of relatives, investment in shares or property abroad — with gifts and loans to non-residents inside the same ceiling. You declare the purpose to the bank on Form A2. The ceiling and the excluded purposes are set by the RBI and have changed more than once, so the figure to work from is the one current at the date of the transfer. See Form A2 and LRS remittances.
