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India: Data centre services not taxable as royalty under tax treaty with Singapore

India: Data centre services not taxable as royalty

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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  • Payments for infrastructure, data centre services not taxable as royalty income under India-Singapore income tax treaty: The Mumbai Bench of Income-tax Appellate Tribunal held that receipts on account of infrastructure data centre services were not taxable as royalty income under either the Income-tax Act, 1961, or the income tax treaty between India and Singapore. Further, the tribunal held that management consultancy services and referral fees were not taxable as fees for technical services because the “make available” conditions under the tax treaty were not fulfilled. The case is: Edenred Pte Ltd. Read a July 2020 report [PDF 440 KB]

  • Tax withheld at source, payments made to sub-contractor: The Supreme Court held that payments made to a truck operator for hiring vehicles were subject to tax withholding at source as payments made to a sub-contractor. The case is: Shree Choudhary Transport Company. Read an August 2020 report [PDF 307 KB] 

  • Dividend payments to non-residents, exemption from higher tax withholding when no permanent account number: The Central Board of Direct Taxes (CBDT) issued a notification concerning dividend payments made to non-residents and exempting these payments from the higher withholding of tax that applies when there is no permanent account number. Read an August 2020 report [PDF 279 KB]

  • “Transparent taxation” platform in 2020 budget speech: The 2020 budget speech presented by the prime minister included plans for a “transparent taxation” platform with a “taxpayers’ charter” intended to ease compliance burden, provide greater certainty, and establish a fair tax system. Read an August 2020 report [PDF 290 KB]

  • Amendment to electronic assessment scheme in budget speech: The 2020 budget speech introduced an amendment to the electronic assessment scheme to allow for remote (“faceless”) appeals. In response, the CBDT amended the instructions for the “faceless assessment scheme.” Read an August 2020 report [PDF 476 KB]

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