Non-resident tax updates: Non-residents can work on Indian projects only on employment visa; business visa norms to be tightened

In the present liberalized economic environment, Indian
companies are awarding work for execution of projects/contracts to foreign
companies, including the Chinese. This has resulted in inflow of foreign
nationals, including the Chinese, for execution of projects/contracts in several
sectors e.g. steel, power etc. It has come to the notice of the government that
a large number of foreign nationals, including Chinese were coming for execution
of projects/contracts to India on business visas instead of employment visas.

The matter has, therefore, been reviewed by the government
and it has been decided that henceforth a business visa will be issued only to
bona fide foreign businessmen who want to visit India to establish an
industrial/business venture or to explore possibilities to set up an
industrial/business venture in India or who want to purchase/sell industrial or
commercial products or consumer durables, etc., according to provisions of the
official visa manual.

It has also been decided that all foreign nationals coming
for execution of projects/contracts to India, will have to come only on an
employment visa. And that such visa will be granted only to skilled and
qualified professionals appointed at a senior level, skilled position such as
technical expert, senior executive or in a managerial position, etc., and will
not be granted for jobs for which a large number of qualified Indians are
available. Suitable instructions/guidelines have been issued to the Indian
missions abroad to effectively regulate employment and business visa regimes and
ensure that these are issued strictly as per the prescribed norms.

As per the guidelines issued by the government, employment
visas for foreign personnel coming to India for execution of projects/ contracts
may be granted by Indian missions to highly skilled personnel and professionals,
to the extent of 1% of the total persons employed on the project and subject to
a maximum of 20. However, this has been raised to 1% or maximum of 40 for the
power and steel sector projects till June 2010. In case more foreign nationals
are required for any project, then a clearance from the Ministry of Labour &
Employment is required.

(Source: Internet & Media Reports, dated 04.01.2010)