INCOME TAX

Refunds due to non-resident employees of a company after their departure from India.

Circular No. 707

Dated 11/7/1995

To

All Chief Commissioners of Income-tax.

Sir,

References have been received by the Board in cases where non-residents are deputed to work in India and the taxes are borne by the employers. In certain cases, an employee to whom refunds are due has already left India and has no bank account here by the time the assessment orders are passed. A question has been raised whether in such cases the refund can be issued to the employer as the tax has been borne by it.

2. The Board has considered the matter and it is of the view that in so far as the payment of refund which has already become due is concerned, there may be no objection to giving the refund to the employer if the non-resident assessee duly gives an authorisation in this regard. In such cases, the procedure laid down in Circular No. 285, dated 21-10-1980*, issued by the Central Board of Direct Taxes needs to be followed. A copy of the circular is enclosed for ready reference.

3. Under the provisions of section 163 of the Income-tax Act, 1961, inter alia, any person from or through whom the non-resident is in receipt of any income, whether directly or indirectly, can be regarded as an agent in relation to the non-resident. Accordingly, the company itself can file the return and can be assessed in its own name in respect of that income under section 161(1) of the Act, and claim the refund.

Yours faithfully,

(Sd.) Siddhartha Mukherjee,

Secretary, Central Board of Direct Taxes.