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India: Treatment of non-compete fees, executive search fees

India: Treatment of non-compete fees

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

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  • Non-compete fees are eligible for depreciation: The Bombay High Court followed a decision of the Gujarat Court that depreciation under Section 32 of the Income-tax Act, 1961 is allowable with respect to non-compete fees. The case is: Piramal Glass Ltd. Read a June 2019 report [PDF 604 KB]

  • Fees for executive search not taxable as “fees for technical services” or royalty under the India-Netherlands income tax treaty: The Mumbai Bench of the Income-tax Appellate Tribunal held that executive search fees are distinct from licence fees (taxed as royalty income) and are not taxed as fees for technical services under India’s income tax treaty with the Netherlands. The case is: Spencer Stuart International BV. Read a June 2019 report [PDF 737 KB]

  • Step-down subsidiary of listed company: The Hyderabad Bench of the Income-tax Appellate Tribunal held that notional income recognised by the taxpayer was not “real” dividend income. The case is: Apollo Sugars Clinics Ltd. Read a June 2019 report [PDF 815 KB]

  • Proposed amendments with respect to audit of accounts of trust or institution: The Central Board of Direct Taxes issued a draft notification proposing changes to the audit rules with regard to the accounts of trusts or institutions. Read a May 2019 report [PDF 814 KB]

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