homebusiness NewsView | Akshata Murthy UK tax fracas: The elephant in the room is India's weak DTAAs

View | Akshata Murthy UK tax fracas: The elephant in the room is India's weak DTAAs

View | Akshata Murthy UK tax fracas: The elephant in the room is India's weak DTAAs
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By S Murlidharan  Apr 12, 2022 9:25:50 AM IST (Updated)

Akshata Murthy w/o Rishi Sunak Chancellor exchequer UK might have bought peace for her husband, expected to behave like a Caesar's wife, by offering to pay taxes on her foreign income despite being a non-resident but will it ward off her Indian tax liability? She might find herself between the rock and the hard place.

Akshata Murthy, daughter of Infosys founder Narayana Murthy and wife of Chancellor of Exchequer the UK Rishi Sunak has been in the eye of the storm. The charge is she has ample overseas income including dividends from her 0.93 percent shareholding in Infosys and not paying tax on them, pretending to be a non-resident. It now turns out that she has volunteered to pay taxes to the UK exchequer on her foreign income though strictly speaking she might not be required to. Her husband is feeling the relentless heat of ruckus over not disclosing the family’s assets as he is obliged to more so as he is Caesar’s wife holding as he does the august office of chancellor exchequer. The belated magnanimity to pay up tax though not required in her considered view may thus be a grandstanding. Be that as it may.

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India, which has fashioned most of its laws after its former ruler and the UK reach out to a resident’s world or global income for taxation. The opposition in the UK says her declaration of non-domicile status in the UK is an afterthought to buck the heavy UK income tax on her ample foreign income including from her Infosys holdings.
Section 9 of the Indian Income Tax Act says dividend payable by an Indian company is deemed to arise in India, period. The implication is no matter where you live or get paid such dividends, it is taxable in India. A peremptory law indeed. But then the entire tenor of section 9 is this—if you earn your income abroad which is not possible but for its Indian connection, you are taxable in India. That is how capital gains from the transfer of shares of Indian companies are taxable in India no matter where the deal is consummated, Cayman Island or Ajanta Caves!
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