(MENAFN- Khaleej Times)

Question: Some of my family members in India have foreign income from assets which were gifted to them. Are they required to disclose their foreign income in the tax return which they file in India?

ANSWER: Resident Indians are liable to pay tax on income which is earned or received in any part of the world. If they do not do so, they will be liable to penalty and prosecution for concealment of their foreign income , apart from recovering the tax and interest thereon. It is to be noted that the Indian tax authorities receive information from more than 100 countries under exchange of information agreements which India has entered into with such countries. Therefore, the tax authorities receive information in respect of foreign assets and income earned by resident Indians from foreign governments.

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According to data collected for the assessment year 2024-25, taxpayers in India are voluntarily disclosing their foreign income in their tax returns. Those who had not done so have filed revised returns in supersession of their original ones, disclosing their foreign income earned on overseas assets. The Central Board of Direct Taxes has a special cell which verifies data received from foreign jurisdictions with the amount shown in the tax return by each individual. Therefore any discrepancy would come to light which would then become the subject of assessment of concealed income with dire consequences.

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Question: A multinational company for which I am working in the Gulf is keen to set up a medium sized Global Capability Centre. We have been advised that it would be best to set up a mid-market GCC in a small city of India. I am not very clear as to what a mid-market GCC is. Will we be able to attract a talented workforce?

ANSWER: A mid-market GCC is generally established by companies with revenues between $250 million and $2 billion. According to experts who work in this field, it is expected that over 120 new mid-market GCCs may be set up by the end of 2026 and the total number of people employed in this sector will exceed a quarter million. The growth of this sector will be led by companies developing software, setting up retail outlets, and financial services like banking, insurance and accounting. The skills of employees which will be in great demand will be in the fields of machine learning, artificial intelligence, data analytics, cloud engineering, cyber security, full-stack development, product management and solution architecture. Non-engineering skills in demand will be in the fields of supply chain management, digital marketing, finance and accounting.

Most of the mid-market GCCs are being set up in Pune, Hyderabad, Chennai, Bengaluru and Gurugram, with Ahmedabad, Indore and Jaipur catching up fast. The success of the mid-sized GCCs is on account of costs being kept in check as a result of availability of talented young engineers and other employees at lower remuneration packages than what is demanded in the metros. Lease rent and overhead expenses which are 30-40 per cent lower in these locations have ensured high profitability and success for mid-market GCCs.

Question: While the agricultural sector is expected to perform well above average this year due to the forecast of a good monsoon, the industrial sector may remain sluggish. Will this affect the economy as a whole?

ANSWER: Manufacturing activity is, in fact, projected to achieve an all-time high during the current financial year. The HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 58.4 in June, whereas it was 57.6 in May. June also registered a quicker upturn in new order inflows. According to data collected, this increase was on account of marketing efforts and a substantial rise in exports. Production volumes have been driven by efficiency gains, favourable underlying demand, and higher sales volumes. This acceleration has been led by manufacturers of intermediate goods.

Another favourable trend was reflected in UPI transactions which rose 32% in June year-on-year in volume and 20% in value, aggregating to Rs.24 trillion. The rise in industrial production by the manufacturing sector has triggered a substantial increase in employment of additional labour. In fact, in certain sectors, the demand for skilled employees has outstripped the availability of qualified engineers which has made it difficult for certain sectors of industry to achieve their full potential.

The writer is a practising lawyer, specialising in corporate and fiscal laws of India.

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