For Indian professionals working in China, Indian businesses with Chinese trade or operations, and returning expats. We handle the India-side compliance — DTAA application, foreign tax credit on Chinese IIT, Schedule FA disclosure, and the RNOR window for clean reentry.
China's Individual Income Tax regime, the long-standing India-China DTAA, and the strict foreign asset disclosure rules in India all interact in ways that need careful handling.
You may be Indian-resident under Section 6 (if you spent 60+ days in India and 365+ days in the four prior years) and simultaneously Chinese tax-resident (183+ days in China). Both jurisdictions can attempt to tax the same salary. The India-China DTAA, particularly Articles 4 (residency tie-breaker), 14 (independent personal services / employment), and 22 (other income), determines which side gets the primary right to tax.
China's Individual Income Tax (IIT) is progressive from 3% to 45% on comprehensive income. For Indian residents drawing Chinese-source salary, the IIT paid can be claimed as foreign tax credit in India via Form 67 — but only if the form is filed before the ITR due date.
If your Indian company has a representative office, branch, or subsidiary in China — or even just regular trade with Chinese counterparties — there are India-side questions on transfer pricing, withholding tax on payments, GST on import of services, and reporting under Form 3CEB if related-party transactions cross the threshold. We focus on the India-side reporting.
Any Chinese bank account, securities account, real estate holding, business interest, or signatory authority must be disclosed in Schedule FA of your Indian ITR. The Black Money Act, 2015 imposes a flat penalty of Rs. 10 lakh per non-disclosed asset — and there is no immateriality threshold. Even a small forgotten WeChat Pay-linked account counts.
Triggering Indian residency in the wrong financial year can pull your Chinese savings, investment income, and any retained business interest into the Indian tax net. The RNOR transition window — typically 2-3 financial years post-return — is where the planning happens.
India-side compliance for clients with Chinese connections, handled remotely with full DTAA and Form 67 coordination.
Determination of residential status under Section 6 of the Income Tax Act and application of the Article 4 tie-breaker rules under the India-China DTAA where dual residency arises. Documentation of physical presence, vital interests, and habitual abode for treaty defence.
Section 6 / DTAA Art. 4Preparation and filing of ITR-2/ITR-3 with full reporting of Chinese salary, allowances, bonuses, and stock benefits. Includes INR conversion at SBI TT buying rate and correct DTAA treatment of each income component.
ITR-2 / ITR-3Filing of Form 67 to claim foreign tax credit for Chinese IIT paid. Includes computation of admissible credit (lower of Indian tax on doubled-up income or Chinese IIT actually paid), supporting documentation, and timing within the ITR due date.
Form 67 / FTCApplication of the India-China Double Taxation Avoidance Agreement — Article 14 (employment income), Article 7 (business profits), Article 11 (interest), Article 12 (royalties and FTS), and Article 13 (capital gains).
DTAADisclosure of Chinese bank accounts (Bank of China, ICBC, etc.), brokerage holdings, property, business interests, and signatory authorities. Critical for Black Money Act compliance — Rs. 10 lakh penalty per non-disclosed asset.
Schedule FAIndia-side reporting for Indian companies with Chinese operations — withholding tax under Section 393(2) of the Income-tax Act, 2025 (earlier Section 195), transfer pricing under the corresponding provisions and Form 3CEB, GST on import of services, and Form 145/146 for outward remittances (replaces 15CA/15CB).
TP · Section 393CA certification for outward remittance from your Indian accounts to your Chinese accounts. Form 146 issuance, Form 145 submission, tax clearance, and bank-side coordination — under the Income-tax Act, 2025 (Rule 220 of the 2026 Rules); replaces earlier Form 15CA / 15CB.
Form 145 / 146Multi-year RNOR roadmap, optimal timing of return, restructuring of Chinese savings and investments, NRE/NRO conversion planning, and a clean transition path to Resident taxpayer status.
Relocation AdvisoryThese are the situations we handle most frequently for our China-connected clients.
You are an IT professional in Shenzhen drawing CNY salary, with Chinese IIT deducted at source. As an Indian resident, the gross salary is taxable in India — but the IIT paid is creditable via Form 67. We compute the admissible credit, file Form 67 within the deadline, and ensure no double tax.
You are India-resident and provide consulting services to a Chinese company that withholds tax under Chinese rules. Article 14 / Article 12 of the India-China DTAA determines whether the income is taxable in China at all, and what credit is available in India. We assess the article correctly and claim the right relief.
Your Indian company has a person in China generating contracts. Whether this creates a Chinese Permanent Establishment determines whether your global profits become Chinese-taxable. We assess the PE risk under DTAA Article 5 and recommend governance changes to manage exposure.
You have RMB savings, a Bank of China brokerage, and a small Chinese property. Triggering Indian residency without RNOR planning would make all Chinese-source income immediately Indian-taxable. We map the RNOR window, plan distributions and conversions, and time your return.
You held a Chinese bank account or WeChat-linked balance for years without disclosing in Schedule FA. The Black Money Act, 2015 carries severe penalties — Rs. 10 lakh per asset and possible prosecution. We assess your specific exposure, file revised or belated returns where the window is open, and prepare a voluntary disclosure narrative if a notice has already been received.
India-China cross-border tax is a niche, and most domestic CA firms either skip it or get the DTAA wrong. We have built this as a focused practice.
China is just 2.5 hours ahead of India. We schedule WhatsApp, email, and video calls during your business hours and turn around documents the same business day in most cases.
Working knowledge of Articles 4, 7, 11, 12, 13, 14, 15, and 22 of the India-China treaty — the ones that decide where each kind of income gets taxed. Correct article application is what separates a clean return from a notice waiting to happen.
Form 67 must be filed on or before the ITR due date — missing it can mean losing the foreign tax credit entirely for that year. We track this aggressively and treat it as a blocking step, not paperwork.
For Chinese IIT filings, employer hukou matters, or Chinese corporate filings, you need a local advisor in China. We focus on the India side and coordinate directly with your China-side provider on numbers, timing, and supporting documents.
Answers to the questions our China-connected clients ask most often. If yours is not covered, send us the specifics on WhatsApp and we will respond.
Likely yes. Indian residency under Section 6 of the Income Tax Act, 1961 is met if you spent 182+ days in India in the relevant FY or 60+ days in the FY plus 365+ days in the preceding 4 FYs. The 60-day rule extends to 182 days only if you left India for employment abroad — courts apply this strictly. We compute residency to the day before advising on filing position.
If you are an Indian resident, your global income (including China-source salary) is taxable in India. The IIT paid in China is creditable in India under Article 23 of the India-China DTAA via Form 67, capped at the Indian tax attributable to that income. We compute the credit, file Form 67 before the ITR due date (mandatory — late filing forfeits the credit), and reflect it in Schedule TR / FSI of your return.
Article 4 (residency tie-breaker), Article 14 (employment income — taxable in China if exercised there subject to the 183-day / employer / PE tests), Article 7 (business profits — relevant if you consult independently), Article 11 (interest), Article 12 (royalties / FTS), Article 13 (capital gains), and Article 22 (other income). We map your income types to articles before computing the FTC.
If you are Resident and Ordinarily Resident, yes — Schedule FA must include every Chinese bank account, brokerage holding, employer-provided ESOP / RSU, real estate, and signatory authority. Non-disclosure attracts a flat Rs. 10 lakh penalty per asset under the Black Money Act, 2015, plus prosecution. NRIs and RNORs are not required to file Schedule FA for the period they are non-resident.
Possibly. A PE is triggered under Article 5 of the India-China DTAA if you have a fixed place of business in China, a dependent agent with authority to conclude contracts, or a service PE (employees in China for more than 183 days in any 12-month period providing services). PE risk means China can tax the attributable profits and India loses primary taxing rights. We assess PE exposure before extended staff deployments.
Yes. Payments to Chinese non-resident vendors for technical services, royalties, or interest attract TDS under Section 393(2) of the Income-tax Act, 2025 (earlier Section 195) read with the India-China DTAA — typically 10 % for FTS / royalties (treaty rate) subject to TRC + Form 10F. Outward remittance requires Form 145 / 146 (earlier 15CA / 15CB) certification. We handle the TDS, certification, and bank-side coordination together.
RNOR (Resident but Not Ordinarily Resident) is a transitional residency status under Section 6(6). For the year you return, you are RNOR if you were non-resident in 9 of the preceding 10 years or in India for less than 729 days in the preceding 7 years. As RNOR, your foreign-source income (Chinese salary / interest / capital gains earned outside India) is not taxable in India for up to 2-3 years. We map your specific facts to maximise the RNOR window before triggering full Resident status.
Vesting that occurs while you are an Indian Resident triggers Indian tax on the perquisite value. Sale of vested shares is a capital gain under Indian law, with the cost stepped to fair market value at grant / vest depending on the scheme. The Chinese employer's IIT withholding is creditable via Form 67, but only if you file the return correctly with Schedule FA + Schedule CG + Schedule FSI. Mishandling at the return-to-India transition is the single most common scenario we untangle.
Whether it is an IIT credit claim, a Schedule FA correction, a PE question, or a return-to-India plan — book a focused consultation with CA Kuldeep Pandey.
Chat on WhatsApp