India: Tax treatment of non-compete fee; no permanent establishment from UAE liaison office

India: Tax treatment of non-compete fee

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


Related content

  • Payment of non-compete fee: The Delhi Bench of the Income-tax Appellate Tribunal held that “non-compete fees” paid for not disclosing confidential information relating to the business and for not competing in a similar line of business in certain territories for a period of five years are capital expenditure. Further, the tribunal held the taxpayer is not entitled to claim depreciation for such capital expenditure. The case is: Hindustan Coca Cola Beverages. Read a May 2020 report [PDF 306 KB]

  • Permanent establishment of liaison office of UAE based company: The Supreme Court held that the liaison office of a UAE based company did not constitute a permanent establishment in India. The Supreme Court observed that activities carried on by the liaison office in India were of a preparatory or auxiliary character and given that such activities are specifically exempt under Article 5(3)(e) of the India-UAE income tax treaty, the liaison office did not constitute a permanent establishment in India. The case is: U.A.E. Exchange Centre. Read a May 2020 report [PDF 368 KB]

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal