I have no experience with either the US or India. That said, would the income really count as US sourced if all services were rendered from India? Would it depend on what percentage of the sales are in the US?
You are right. I had replied earlier under the wrong assumption that the company is incorporated in the US but managed in India.
Assuming the following to be the facts:
i) Company is incorporated outside of India and not in US;
ii) Management is from India (Board meeting held in India and key commercial decisions taken in India);
iii) Software based income derived from US.
It is not clear as to the location of incorporation other than a mention that it is an offshore company. However, since most DTAAs (other than India-USA) allow POEM to be the tie-breaker for residency, even thought the company is incorporated elsewhere , it will be a resident of India. Hence all incomes of the company will be taxable in India.
Further, unless a the income is derived through a permanent establishment in the US, business profits arising from USA of a company resident in India cannot be taxed in USA. In the current case, it is assumed that no such fixed place of business is available in US creating a PE through which the income is earned.
However, the India-USA DTAA allows USA to tax upto 10% of the income, if the same falls under "Fee for Technical Service" (Authorities usually argue that software service falls under this category). The person making the payment would be obligated to withhold taxes at this rate on the payments made to you, if applicable.
Apologies for the previous comment.
