An Indian professional has moved to Brazil for a long-term project and qualifies as a non-resident of India. Alongside the overseas assignment, the individual, with permission from their employer, provides architectural design and planning services to a resort company in Goa.
The Goa-based company plans to pay the professional fees into the individual's foreign bank account.
Assuming the individual qualifies as a non-resident (NR) for Tax Year 2026-27 under the Income-tax Act, 2025, India can tax income that is received or deemed to be received in India, or income that accrues or is deemed to accrue or arise in India.
The architectural design and planning work would qualify as consultancy services and fees for technical services (FTS) under Indian tax law.
Since the payment is being made by an Indian resident company to a non-resident, the income would be deemed to accrue or arise in India.
Under Indian domestic law, the income would therefore be taxable at 20%, plus applicable surcharge and cess.
If the individual is also a tax resident of Brazil, the India-Brazil Double Taxation Avoidance Agreement (DTAA) would come into play.
Under many Indian tax treaties, professional services such as architecture fall under Independent Personal Services. Generally, such income is taxable only in the country where the individual is resident, subject to conditions such as having a fixed base in India or spending 183 days or more in India during a 12-month period.
However, the India-Brazil DTAA has specific provisions for fees for technical services.
The India-Brazil DTAA was recently amended to introduce provisions covering FTS, including consultancy services.
Under this treaty, the FTS provisions override the Independent Personal Services provisions when the services qualify as FTS.
Since the architectural services in this case fall under the FTS provisions, the Independent Personal Services article would not apply.
Instead, the Indian tax liability would be limited to 10% of the gross professional fees under the treaty.
Since the DTAA rate is more beneficial than the domestic tax rate, the individual can claim the treaty benefit.
A tax credit for taxes paid in India may be available in Brazil, subject to the applicable provisions of Brazilian tax law.
