Liquidation proceeds

A distribution to an Indian company by a foreign subsidiary upon its liquidation is treated as dividends to the extent it is attributable to accumulated profits up to the date of liquidation. The balance is treated as a return of capital and taken into account in determining the capital gain or loss on the shares held.

Dividends

See "Foreign subsidiary income" above for treatment of dividends>

Interest

Interest from foreign subsidiaries is fully taxable in the hands of the Indian company, with credit allowed for foreign tax withheld or paid, up to the Indian tax on the interest.

Royalties and fees for technical or professional services

Indian companies and other residents are allowed a deduction equal to 50 percent of the royalties and fees for technical and professional services received in convertible foreign exchange from foreign governments or any foreign enterprise for granting the use of patents, providing technical or professional services abroad, etc. The excess and any other royalties and fees for technical services are taxable in full, subject to credit for the foreign tax withheld or paid up to a maximum of the Indian tax on the royalty or fees.

Foreign exchange gains and losses 

Profits and losses of foreign branches, royalties and fees for technical services, and interest (other than interest on securities) arising in foreign currency are translated for inclusion in the worldwide taxable income of the Indian company at the relevant telegraphic transfer buying rate. Dividends from foreign subsidiaries, capital gains and interest on securities are also translated the relevant telegraphic transfer buying rate. Revenue gains or losses in exchange are included or deducted in computing the worldwide taxable income.